Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

European Defence Capability

Mr. Deakins: asked the Minister of State for Defence whether it is the policy of Her Majesty's Government to work for a distinct European defence capability within the framework of the Atlantic Alliance.

The Minister of State for Defence (Lord Balniel): We aim to foster European defence collaboration within N.A.T.O. so as to improve the military capability of the Alliance as a whole.

Mr. Deakins: Will the Minister of State confirm that this will ultimately involve sharing control of nuclear weapons with other countries of the Western Alliance.

Lord Balniel: That takes the matter much wider than the original Question. Our object is to improve the defence capability of N.A.T.O. as a whole, and, in so far as European defence can be strengthened, that is a contribution to that wider objective.

Mr. Scott-Hopkins: Would not my hon. Friend agree that, with the excessive cost of modern weaponry now, we must have greater integration and co-operation with our European allies within N.A.T.O. for the production of weapons, each country, perhaps, taking on a specific task for the future development of sophisticated weapons of this type?

Lord Balniel: I entirely agree. I am sure that such an objective, if achieved, would be of value to all members of the N.A.T.O. alliance. It is difficult to achieve, and there is substantial room

for improvement, but we shall play what part we can in achieving it.

Mr. Frank Allaun: Will the Minister of State assure the House that we shall not share our nuclear knowledge with France, as this would be a breach of the Non-Proliferation Treaty whether France was inside N.A.T.O. or outside?

Lord Balniel: Discussions between France and ourselves about nuclear collaboration must depend upon a better understanding between us on the broad strategic objectives at which we must aim.

Mr. John Morris: As the M.R.C.A. is the most important single item in the practical development of a European defence capability, may we be told what is the reaction of our European partners to the Rolls-Royce situation? Does it affect contractual arrangements? As the Minister's last statement on the matter was on 22nd July, when does he intend to bring the House up to date on progress, development and costs?

Lord Balniel: Perhaps the hon. Gentleman will put down a Question on that specific point, or seek to catch Mr. Speaker's eye during the debate this afternoon.

Royal Navy (Recruiting)

Mr. Lane: asked the Minister of State for Defence whether he will make a statement on recent trends in naval recruiting.

The Under-Secretary of State for Defence (Mr. Peter Kirk): In 1968–69, the Royal Navy, including the Royal Marines, recruited some 4,700 men, the lowest number for many years. Recruitment for 1969–70 showed an increase of 15 per cent., and during the first nine months of the current financial year there has been a marked increase over the same period last year, in the order of 23 per cent.

Mr. Lane: I thank my hon. Friend for those encouraging figures. Will he confirm that, as a further stimulus to naval recruiting, it is the Government's intention to maintain the widest possible naval presence throughout the world, whatever may be their decisions about particular fixed bases or installations in different areas?

Mr. Kirk: We have an ocean-going navy and, as my hon. Friend knows, we are maintaining a presence in Singapore and east of Suez generally.

Polaris

Mr. Roderick: asked the Minister of State for Defence whether it is the Government's intention to maintain parity with the French Polaris Submarine Fleet.

Lord Balniel: The Government intend to maintain the effectiveness of our contribution to the Western strategic nuclear deterrent. I cannot answer for the intentions of the French Government.

Mr. Roderick: Does the Minister of State agree that it is as unlikely as it is undesirable in the interests of non-proliferation that the French Government should be able to acquire submarines with missiles unless receiving information from N.A.T.O. or the United States Government?

Lord Balniel: As I say, it is not for me to answer for the French Government regarding the development of their nuclear programme.

Mr. John Morris: In July, the Minister could give me no assurance that the Government would not build a fifth Polaris submarine. He has now had some time to think about the matter. Can he give that assurance now?

Lord Balniel: The option to build a fifth Polaris submarine remains open to us and is under continuous review. No decision one way or the other has been taken.

Mr. Latham: asked the Minister of State for Defence whether information regarding the development of Polaris missile warheads has been obtained from the United States of America under the Polaris sales agreement.

Lord Balniel: No, Sir. The Polaris sales agreement does not cover the provision by the United States of information about warheads.

Mr. Latham: Is it correct that Polaris submarines are now equipped with multiple warheads? If so, can the Minister of State tell us when, where and how provision was made for this in the

Defence Estimates? Can he give an indication of the cost incurred, either as a sum or as a proportion of defence expenditure, and can he say when such multiple warheads are likely to become obsolete?

Lord Balniel: I cannot give the technical information for which the hon. Gentleman asks. As to the number of warheads, there has been no change since the previous Administration.

Mr. Latham: asked the Minister of State for Defence what stage has been reached in the development of the multiple independently-targetable re-entry vehicle warhead for Polaris missiles.

Lord Balniel: Measures required to maintain the effectiveness of the Polaris force as our contribution to the Western strategic nuclear deterrent are kept under constant review and will be introduced as and when they are necessary. It would not be in the public interest to disclose details of these measures.

Mr. Latham: While I appreciate the last part of the Minister's answer, may I ask, does not he agree that as these ghastly weapons develop, if there is to be an intention, to put it euphemistically, as the hon. Gentleman does, to maintain Britain's contribution to the strategic rôle of N.A.T.O., it will be necessary to develop a multiple independently-targetable vehicle? Does he envisage that the British so-called independent deterrent will ultimately become dependent upon the United States for the supply of suitable warheads?

Lord Balniel: The main burden of the hon. Gentleman's question is whether the re-entry bodies are in any way targetable. I am not prepared to give that information, as I do not regard it as being in the public interest to do so.

Mr. George Thomson: Can the Minister give an assurance that the Government are closely following the S.A.L.T. talks on limitation of strategic armaments between the Soviet Union and the United States?

Lord Balniel: Yes, Sir. We are following them very closely and have been kept closely informed on the matter.

Beira Patrol

Mr. Biggs-Davison: asked the Minister of State for Defence whether he will place Her Majesty's ships and aircraft engaged in the Beira control operation on other duties.

Mr. Kirk: The Beira patrol is one of the means of enforcing sanctions imposed on Rhodesia. It will continue as long as necessary.

Mr. Biggs-Davison: Since the security of the Indian Ocean demands not only the support of the South African and other friendly navies but a continuous British armed presence in the Gulf, will my hon. Friend reject any advice that we lack ships for the Gulf while these frigates are frigging around the Mozambique Channel?

Mr. Kirk: That is another question.

Mr. Moyle: Can the Minister say how many frigates are now involved in the patrol, including those on station and those on rest or recreation?

Mr. Kirk: No, Sir. That is information which we do not disclose.

Rear-Admiral Morgan-Giles: Is my hon. Friend aware that Servicemen are accustomed to doing their duty through thick and thin, but that the airmen and sailors involved in this patrol are absolutely much-sick of their pointless duties?

Mr. Kirk: Sailors never fail to tell me what they feel about anything when I visit them.

Dr. David Owen: We on this side congratulate the Government on maintaining the Beira patrol. Is it not a fact that the patrol has been one of the most successful naval blockades in history? It was aimed solely at stopping oil from flowing into Beira. It has achieved that aim, and it must be maintained.

Mr. Kirk: It is certainly true that in this case, as in many others, the Royal Navy has carried out its task.

Mr. Biggs-Davison: On a point of order. In view of the unsatisfactory nature of the reply, I shall seek leave to raise the matter on the Adjournment.

Admiralty Ferry Crew Association

Sir B. Rhys Williams: asked the Minister of State for Defence if it is intended to maintain the active seagoing rôle of the Admiralty Ferry Crew Association; and if he will make a statement as to the future organisation of the Association.

Mr. Kirk: The active section of the Admiralty Ferry Crew Association became List III of the Royal Naval Auxiliary Service in 1963. Its future is currently under consideration.

Sir B. Rhys Williams: Will my hon. Friend consider the danger that if the sea-going rôle of the association is ended there is likely to be a considerable loss of good will and of experienced membership of the association?

Mr. Kirk: That is one of the factors we are bearing in mind in the review. We are anxious to use these volunteers in the most effective means for the support of the Fleet.

Nuclear Weapons (Co-operation with France)

Mr. Booth: asked the Minister of State for Defence (1) what communication he has received from the French Ministry of Defence regarding nuclear weapons; and what reply he has sent;
(2) whether Her Majesty's Government have made proposals to the French Government for the joint development of nuolear weapons or the exchange of information.

Lord Balniel: We have received no communication from the French Ministry of Defence about nuclear weapons and we have made no proposal to it.

Mr. Booth: Since the Government have received no proposal from the French Ministry of Defence for co-operation in the use or manufacture of nuclear weapons, will the Government take that as an indication that the French Government wish to have no such co-operation? Will the Minister accept that, in view of this, the Conservative Party's previously-proposed policy for Anglo-French nuclear co-operation should be dropped? If he is not prepared to do so, does he


at least agree that before any such co-operation is proposed or negotiated the United Nations should have a chance to examine whether it would involve a breach of the non-proliferation treaty?

Lord Balniel: The whole basis of the hon. Gentleman's question is hypothetical, because, as I have already explained to the House, discussions between ourselves and the French Government on nuclear collaboration must depend on establishing a closer identity of purpose as to the broad strategic purposes in which we are both interested. That does not exist at present, and therefore the question is hypothetical.

Dr. David Owen: Will the Minister confirm that under the Nassau Agreement as the communiqué made clear in paragraphs 6 and 8, Polaris missiles were assigned to N.A.T.O. nuclear forces and targeted according to N.A.T.O. nuclear plans, and that, therefore, while the French continue their present attitude to N.A.T.O., it would be impossible to conduct any discussions on nuclear collaboration?

Lord Balniel: The hon. Gentleman is correct in saying that the British Polaris force is assigned to N.A.T.O. and that any proposal such as has been put forward for Anglo-French nuclear collaboration would require the most careful consideration.

Mr. Roderick: asked the Minister of State for Defence what proposal Her Majesty's Government have made to the North Atlantic Treaty Organisation for co-operation with French forces in the use of nuclear weapons or for pooling of French nuclear weapons within the North Atlantic Treaty Organisation.

Lord Balniel: None, Sir.

Mr. Roderick: In that case can the Minister confirm that the policy as enunciated at the election by his party, that of co-operation with the French in these matters, is to be dropped?

Lord Balniel: The policy is to secure a greater European contribution to the N.A.T.O. alliance. That has always been our policy and it remains our policy.

Mr. Latham: May I ask the Minister whether he is in a position to confirm reports that the French will have their

first Polaris submarine operational this year, expect to have their fourth by 1975 and yet are lagging behind in techniques of missile warhead production? Can he give an assurance that any approach by the French Government asking the British Government to supply such warheads will be rejected? Can he further give an assurance that any approach to the United States will be discussed with the British Government, as a fellow-member of N.A.T.O.?

Lord Balniel: I am anxious to help the House, but I cannot answer questions on behalf of the United States Government or the French Government. The question which the hon. Gentleman raises is entirely hypothetical.

Mr. Fell: Can my hon. Friend give me any reason why the Opposition seem to be so much against the build-up of the defences of the West?

Lord Balniel: I have just said that I cannot answer for the French or United States Government. Thank heavens I do not have to answer for the Opposition.

Mr. Fell: Can my hon. Friend give me any reason why the Opposition seem to be so much against the build-up of the defences of the West?

Lord Balniel: I have just said that I cannot answer for the French or United States Government. Thank heavens I do not have to answer for the Opposition.

U.S.S.R.

Mr. Hastings: asked the Minister of State for Defence whether he will call for a full up-to-date assessment of the Soviet threat to this country in all its aspects; and whether he will publish the results.

Lord Balniel: All threats to this country are kept under continuous review in association with our allies as appropriate. We do not disclose detailed assessments but general conclusions are published in the Defence White Papers from time to time.

Mr. Hastings: Does my right hon. Friend agree that internal subversion, disruption and what I understand is referred to as "dis-information" are as much part of the Soviet threat to this country as continuing naval expansion abroad? Is he satisfied that the Government have adequate information on this aspect of the threat and that this information is adequately co-ordinated between Departments?

Lord Balniel: I do not think that any Minister could say that he is satisfied with the information at his disposal. Questions on internal security and internal


subversion are basically questions which should be answered by my right hon. Friend the Home Secretary.

Mr. Crawshaw: Does the Minister accept that while the threat might be global, the main area of threat is still in Europe? If so, what are the Government doing, apart from the small but welcome increase in the reserve forces, to bring our conventional forces more into line with the Soviet forces and to remove the necessity for our once again being the first to use nuclear weapons in a conflict?

Lord Balniel: I agree with the hon. Gentleman that the main shield that we should maintain is in N.A.T.O. and on the central front. I think that he underestimates the increased contribution we are making not only in the reserves he mentioned but in the running on of "Ark Royal" and the bringing into the front line of a considerable number of additional squadrons of Jaguar aircraft. This is a considerable contribution.

Naval Detention Centre, Portsmouth

Mr. Judd: asked the Minister of State for Defence whether he will make a statement on his plans for rebuilding the naval detention centre at Portsmouth.

Mr. Kirk: There are no plans for rebuilding the Royal Naval Detention Quarters in the near future. I am considering the long-term position.

Mr. Judd: I thank the Minister for that reply. Does he agree that the inadequate and antiquated buildings in Portsmouth make the work of the staff at the detention centre very difficult, and that there is an urgent need to give them proper facilities with which they can approach their job?

Mr. Kirk: The work of the staff in any institution as old as this is bound to be complicated. Unfortunately, our Victorian ancestors built to last, and the buildings are in very good order.

Mr. Scott-Hopkins: Does my hon. Friend agree that it is time to combine the detention services of all three Services into one service for the Armed Forces?

Mr. Kirk: That is one of the matters we are looking into in the long-term review.

Mr. Judd: asked the Minister of State for Defence whether he will make a statement on staff training at the naval detention centre in Portsmouth.

Mr. Kirk: The first qualification is a long experience of naval life which all the staff at the Royal Naval Detention Quarters possess. This is essential for the rehabilitation task for return to the service. Exchanges in visits and information with other penal establishments and the Military Corrective Training Centre at Colchester take place and the extension of specialised training is also under consideration.

Mr. Judd: I am grateful to the Minister for that reply. Does he agree that, in view of the new emphasis on counselling and rehabilitation by the staff of the detention centre, more extensive and specialised training will help them in the job to which they are deeply committed?

Mr. Kirk: I agree. As a result of the conversations the hon. Gentleman and I had, the commanding officer has completed a course at the Grubb Institute of Behavioural Studies, and the senior instructor-designate is being sent on a prison officer course.

International Peacekeping Academy

Mr. Moyle: asked the Minister of State for Defence what assistance the United Kingdom Government are prepared to extend towards the establishment and maintenance of an International Peacekeeping Academy on the lines of the proposals sent to him by General Indar Rikhye.

Lord Balniel: I have agreed to consider sending an expert to a disaster relief seminar which the International Peace Academy Committee plan to hold later this year.

Mr. Moyle: Does the hon. Gentleman agree that these proposals are an excellent way of disseminating the peacekeeping experience of international peace-keeping operations for the future? Will he undertake to give substantially more support to the project than just sending one person to a seminar?

Lord Balniel: Few countries have more experience than we have in this type of


operation and our contribution of sending an expert has been warmly welcomed by those organising the seminar. It will serve a useful purpose.

Rear-Admiral Morgan-Giles: Does not my hon. Friend agree that this is an interesting idea which needs encouraging, both nationally and internationally? Will he look again at the problems facing the Royal United Services Institution?

Lord Balniel: I shall be glad to look at anything my hon. and gallant Friend puts to me.

Mr. George Thomson: Is the hon. Gentleman aware that those who met General Rikhye when he was here recently were impressed by the seriousness of his proposals? This is not an exercise in Utopianism but a practical exercise to find more effective ways of international peace-keeping. Will he look seriously at giving more positive financial help to make the project a success?

Lord Balniel: I, too, met General Rikhye and was impressed by his proposals, but as far as I know he is not seeking financial support from the United Kingdom Government.

Diego Garcia

Mr. Dalyell: asked the Minister of State for Defence when he proposes to visit Diego Garcia.

Lord Balniel: I have no plans to do so.

Mr. Dalyell: That is a pity, because I suspect that no one in the Government machine has the remotest notion of how costly it is to build any kind of a base out of coral limestone and rock.

Mr. Speaker: Order. Is the hon. Gentleman asking a question?

Mr. Dalyell: Does any serious person in the Government machine disagree with the view of my right hon. Friend the Member for Bermondsey (Mr. Mellish), the former Minister of Public Building and Works, that a base at Aldabra or Diego Garcia would cost between £100 million and £130 million?

Lord Balniel: I agree that it is sad that I am not going there, because I understand that the best swimming in the world is to be found among the coral reefs there. The hon. Gentleman is concerned about the costs.

Mr. Dalyell: What are the costs? Tell us.

Lord Balniel: The question of costs does not arise, because, as the hon. Gentleman will be glad to know, the entire costs are being paid by the United States Government.

Mr. George Thomson: Will the hon. Gentleman take this question a little more seriously? Can he tell us what the costs are? What amount are the United States Government going to spend on this British territory?

Lord Balniel: I am not answerable for the United States Government. I do not take the matter of the Diego Garcia communications centre, which is being built, at all lightheartedly. The purpose is to close a gap in the United States' worldwide communications system and to provide communications for ships and aircraft in the Indian Ocean, which is of the utmost importance.

Overseas Training Areas

Mr. Lane: asked the Minister of State for Defence what overseas training areas he expects to be available for British forces after 1971.

Lord Balniel: A precise forecast is impracticable, though I have no doubt that we shall continue to satisfy our requirements. We shall, of course, continue to use existing facilities in Europe in cooperation with N.A.T.O.; and our forces in the Malaysia and Singapore area will train out there under the five-Power defence arrangements.

Mr. Lane: Before taking a final decision on the future of British forces in the Gulf, will my hon. Friend give full weight to the value of retaining some occasional training facilities in certain of the Gulf States which are highly suitable for inter-Service training?

Lord Balniel: The training facilities in the Gulf are valuable to the Services, but I ask my hon. Friend to await the statement by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs.

Mr. Brian Walden: But when are we to be favoured with that statement? We keep reading circumstantial reports in the Press, for which the hon. Gentleman is


not responsible, but when will ate Government make a statement so that we can ask questions about their intentions in the Gulf?

Lord Balniel: I should ask my right hon. Friend if I were the hon. Gentleman.

North Sea Oil and Gas Fields (Defence)

Mr. Laurance Reed: asked the Minister of State for Defence whether in view of the strategic significance of the North Sea oil and natural gas fields and their vulnerability to sabotage during periods of international tension, he will ensure that the Royal Navy develops the underwater capability needed to defend them.

Mr. Kirk: I am satisfied that the Royal Navy's underwater capability, which is under continuous development, will be adequate to meet this particular task if the need arises.

Mr. Reed: Whilst thanking my hon. Friend for that reply, may I ask whether he is aware that this country now shares a common frontier with eight other European countries, including Spain? Would not he agree that the fact that we can now occupy and utilise the sea floor adds an entirely new dimension to naval warfare?

Mr. Kirk: It does indeed.

Sir G. Nabarro: Will my hon. Friend bear in mind that a single depth charge from a hostile submarine—and the Soviets have ten times as many operational submarines as we have— could destroy the whole of the means of transportation of all natural gas from the North Sea to this country?

Mr. Kirk: That thought is very much in our minds and that is why we are taking this matter very seriously.

Harrier Aircraft

Mr. Wilkinson: asked the Minister of State for Defence what evaluations of the Harrier have so far been made for naval and amphibious operations; and if he will make a statement.

Mr. Wall: asked the Minister of State for Defence if he will make a state-

ment on the progress of the sea trials of Harrier aircraft.

Lord Balniel: Trials of the Harrier have so far been carried out in a number of Royal Naval ships including aircraft carriers and a Tiger Class cruiser. A further series of trials in an aircraft carrier is planned this year.

Mr. Wilkinson: Would my hon. Friend agree that it is tragic that this potentially prophetic design for naval operations should be without honour in this country so far and is yet without orders? It opens up a whole new dimension for maritime air operations which should be exploited.

Lord Balniel: I do not think that we can look on the Harrier as being without honour, because we regard it as one of the major weapons developments of the future. The results of the naval trials must be fully evaluated and a full study must be carried out to see whether V.S.T.O.L. operation from naval ships is cost-effective.

Mr. Wall: The operation of this aircraft from ships of the Royal Navy is of vital importance to the future defence of the Navy. Is my hon. Friend aware that many people think that this is taken far more seriously in the United States than here? Will he put more effort into these trials?

Lord Balniel: I assure my hon. Friend that the trials are being proceeded with as rapidly as possible. The evaluation is a considerable undertaking. I am going, shortly, to see the next stage of the evaluation trials.

Dr. David Owen: The hon. Gentleman must be aware that the United States Marines have already ordered Harriers. The order involved very considerable Congressional criticism at the time. We should not wish to do anything to damage sales prospects, but will the hon. Gentleman ensure that the Government's attitude to the Rolls-Royce problem and the RB211 engine will take into account future Harrier orders, since the handling of the RB211 order will be very important in shaping Congressional attitudes to future Harrier orders? Will he ensure that the standing of the British aircraft industry and the honouring of commitments are put before his Ministerial colleagues in relation to defence orders for the Harrier?

Lord Balniel: I suggest that, as the Rolls-Royce situation is being debated later today, that would be the appropriate time to raise this matter.

Mr. Ramsden: Is my hon. Friend aware that what the anxiety is about is lest the hangover of the Harrier controversy in the Royal Navy should in some way prejudice the evaluation of the Harrier for ship-borne operations and result in a dragging of feet? As this may be an important technique to keep alive in the Royal Navy, will he assure us that he will not allow such dragging of feet to happen?

Lord Balniel: I can give my right hon. Friend an absolute assurance. The hangover of the dispute, as far as I sense it, no longer exists. I sense an absolute determination in the Service to make as great a success of this endeavour as it can.

Royal Air Force Reserves

Mr. Wilkinson: asked the Minister of State for Defence what future rôle he envisages for the Royal Air Force Volunteer Reserve and Royal Auxiliary Air Force.

The Under-Secretary of State for Defence (Mr. Antony Lambton): I cannot add anything to the answers I gave my hon. Friend on 19th January, 29th January, and 4th February. Nor shall I be able to do so until the study on this subject is completed, which as I have told the hon. Gentleman, will take some months. I will inform him when the study is completed.—[Vol. 809, c. 264; Vol. 810, c.208;0 Vol. 810,c.430.]

Mr. Wilkinson: Is my hon. Friend aware that I welcome this statement, as I do all the others, because it gives me an opportunity to remind him that flexible response as a strategy demands augmentation of the front line for the air no less than the other arms, and that light attack and close support aircraft will be a valuable reinforcement of the strength of N.A.T.O. in Europe?

Mr. Lambton: I do not need reminding, since my hon. Friend leaves no occasion on which he does not do so.

Mr. Merlyn Rees: Would the Minister not agree that it would be extremely

foolish to spend money in this way for historic reasons when all the firm advice from the Air Staff for fifteen years has been that there is no need for this sort of extra commitment of the R.A.F.?

Mr. Lambton: We can only wait until we see to what conclusions the study comes.

Royal Navy (Light Coastal Forces)

Mr. Wall: asked the Minister of State for Defence if he will take steps to increase the Royal Navy's light coastal forces.

Mr. Kirk: Three fast training boats are being introduced into service now. Future requirements of the Royal Navy for light coastal vessels will be kept under review.

Mr. Wall: Would my hon. Friend agree that from 1930 until about five years ago this country was a world leader in this type of vessel but that now we have only three target vessels? Would he look at some more up-to-date private enterprise designs to see whether they might be made available to the Royal Navy?

Mr. Kirk: As my hon. Friend knows, we have hired "Tenacity" from Vosper Thorneycroft and we intend to evaluate the effect of it.

Northolt Airfield

Mr. Molloy: asked the Minister of State for Defence if he will review the need for the continued use by his Department of Northolt Airfield.

Mr. Lambton: No, Sir.

Mr. Molloy: Is the hon. Gentleman aware that as a result of the close proximity of this airfield to Heathrow there have in the recent past been near-miss air incidents which could prove very dangerous to my constituency and to neighbouring constituencies? Would he not further agree that as this airfield has no significant defence purpose, the land space could be much better used for other, community, purposes?

Mr. Lambton: I think that the hon. Gentleman is referring to a near-accident last year. That was the result of a failure to follow the proper air traffic control


procedures. If they are followed correctly there is no danger. As to the use of the airfield, it is a long-term defence requirement for communication flying by the R.A.F. and our allies.

Mr. Marten: As long as Northolt is used by the R.A.F. could the Minister arrange to have it made more readily available to light aircraft, particularly business aircraft, as are many other Royal Air Force places all over the country?

Mr. Lambton: The point that must be considered is that the Service aircraft must have priority.

Mr. Molloy: On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

B.A.O.R. (Accommodation)

Mr. William Hamilton: asked the Minister of State for Defence what is the result of his examination of proposals for additional increases in the number of married quarters for Her Majesty's Forces in Germany.

Lord Balniel: Since my hon. Friend the Under-Secretary of State for the Army informed the hon. Member for Newark (Mr. Bishop), on 4th December last, of the married accommodation situation in Germany, approval has been given for the acquisition of a further 3,100 long-term hirings. — [Vol. 807, c. 473.]

Mr. Hamilton: Can the hon. Gentleman say how soon the demand will be completely satisfied? Is he aware that there is considerable disquiet over the rising expense of private hiring and that the sooner this problem is resolved the better it will be for recruiting?

Lord Balniel: I am aware of disquiet and I am anxious to hurry this along as much as possible. These hirings are built by private enterprise and it is bound to take a little time to select developers and to find a suitable site. but I will do what I can to accelerate this.

Mr. John Hall: Has my hon. Friend examined the possibility of buying houses in Germany, which at least would show some capital appreciation, rather than merely hiring them?

Lord Balniel: We will certainly consider the matter. If my hon. Friend will be so kind as to put down a specific Question, I will look into it.

N.A.T.O. (British Expenditure)

Mrs. Renée Short: asked the Minister of State for Defence what requests have been made by the North Atlantic Treaty Organisation for increased defence expenditure by Great Britain; and what reply he has given.

Lord Balniel: None. But I am glad to say that the United Kingdom has played a leading rôle in constructing the European Defence Improvement Programme which is a significant affirmation of European support for N.A.T.O.

Mrs. Short: Would the hon. Gentleman bear in mind that at a time when the Government are cutting the social services, the National Health Service, and housing, and when even children are being asked to make a sacrifice, any increase in expenditure on defence would be absolutely unacceptable to this side of the House and to the country as a whole? Will he further bear in mind that under no circumstances are we prepared to accede to requests of this kind if they are made in an attempt to buy our way into the Common Market?

Lord Balniel: The contribution which this country makes to the defence of Europe and N.A.T.O. as a whole has nothing to do with buying our way into the Common Market. It is just that we think that it is right that we should be prepared to make a sacrifice for the defence of freedom and the Western world.

Zambia Defence Forces (British Officers)

Mr. Evelyn King: asked the Minister of State for Defence on what date, in what circumstances and with what notice, seconded British Army and Royal Air Force officers were summarily dismissed from the Zambian Defence Force and required to leave Zambia; and if he will make a statement.

Lord Balniel: I would refer my hon. Friend to the answer the Under-Secretary of State for Foreign and Commonwealth


Affairs gave to my hon. Friend the Member for Haltemprice (Mr. Wall) on 25th January.—[Vol. 810, c. 17.]

Mr. King: Has any apology been received or any protest made in respect of this discourtesy? While there is a case for economic aid to African countries, would it not be wiser to withdraw military aid, particularly from regimes that are politically unstable, since armed forces are constantly mixed up in this and it is embarrassing to British Government personnel?

Lord Balniel: In so far as representations to the Government are concerned, this is a matter for my right hon. Friend the Secretary of State for Foreign Affairs. The personnel concerned are no longer members of Her Majesty's Forces.

Defence Lands (Release)

Mr. Evelyn King: asked the Minister of State for Defence if he has now considered the brief which has been sent to him relative to the release of defence lands, including Tyneham, in Dorset; what action he will take; and if he will make a statement.

Lord Balniel: As I announced in the House on 14th January, a Committee has been appointed to review defence land holdings. I am arranging for the brief to be brought to the Committee's attention.—[Vol. 809, c. 244–7.]

Mr. King: While I recognise that the presence of armed forces will make a substantial improvement to economic and social development to the county of Dorset, may I ask my hon. Friend to try to relax matters so that greater access is granted to Dorset people to these defence lands, about which they feel indignant?

Lord Balniel: We are undertaking a review of the defence lands but it would be wrong for me in advance of the Committee's report to make any undertakings about any specific defence lands.

Mr. Brian Walden: When will the hon. Gentleman be able to make available to the House the report in respect of the movement from Foulness to Pembroke? Here again we have been reading Press accounts of this but have heard nothing about it in the House? Is it to be published and, if so, when?

Lord Balniel: The Question related to defence lands in Dorset. I suggest that the hon. Gentleman puts down a Question on the matters to which he has referred.

Aviation Camp, Middle Wallop (Pedestrian Crossing)

Rear-Admiral Morgan-Giles: asked the Minister of State for Defence whether he will consider the construction of an over-bridge for pedestrians and particularly school children crossing the A343 road in the aviation camp in Middle Wallop.

The Under-Secretary of State for Defence (Mr. Ian Gilmour): This project is receiving consideration.

Rear-Admiral Morgan-Giles: I thank my hon. Friend for that reply.

Northern Ireland

Mr. McMaster: asked the Minister of State for Defence how many searches for arms have been carried out by the Army in Northern Ireland in the past 12 months and with what result, in terms of arms and explosives discovered, arrests made and charges brought for unlawful possession.

Mr. Ian Gilmour: During the past 12 months there have been 572 searches of occupied houses. Since July, 1970, when records were first maintained, an average of 650 vehicles a day have been searched. Searches of unoccupied buildings and of open areas have also been made. In this period, 743 lbs. of explosive, 8,079 yards of fuse, 2.618 detonators, 282 assorted weapons and approximately 40,000 rounds of ammunition have been found. The number of persons charged with unlawful possession totals 171.

Mr. McMaster: While thanking my hon. Friend for that reply, may I ask him, in view of the tragic developments of the past seven days and the number of arms which are being used by extremists and republican elements in attacks on the police, the Army and even women and children, and in view of the amount of explosives used and even publicly flaunted in the streets, to intensify the number of searchers, particularly in those parts where firearms are being repeatedly used?

Mr. Gilmour: Searches are carried out when the G.O.C. has hard information that arms are to be found. Searches are also carried out during action when the security forces see that firing is coming from those houses. Searches in other circumstances are unlikely to be productive. They cause considerable discomfort and damage and are liable to bring sympathy for extremist forces which they do not deserve.

Mr. Simon Mahon: Is the hon. Gentleman aware that in a recent report on the B.B.C. it was said that there were 69,000 licensed firearms in the City of Belfast? That is an alarming number. Can the hon. Gentleman say something about that matter?

Mr. Gilmour: The question of licensed firearms, chiefly shotguns, is for the Stormont Government.

Mr. Kilfedder: Is my hon. Friend aware of the grave concern felt in Northern Ireland about the statement made by the head of the Special Branch of the police in the Republic of Eire that arms were imported into Eire and that part of them have been sent to Northern Ireland? Can my hon. Friend give an assurance that every step will be taken to ensure that the arms in Eire in the hands of the I.R.A. will not be allowed to enter across the Northern Ireland border?

Mr. Gilmour: The existence of illegal arms in Northern Ireland, from wherever they come, is a matter of great concern. But statements by the Chief Constable in Eire are not matters for me.

Mr. George Thomson: Can the hon. Gentleman give an assurance that the question of illegal arms and the question raised by my hon. Friend the Member for Bootle (Mr. Simon Mahon) concerning the number of licensed arms in Northern Ireland will be discussed at the forthcoming meeting between the Prime Minister and the Prime Minister of Northern Ireland?

Mr. Gilmour: I have no doubt that that is a very relevant subject which will Come up.

Mr. McMaster: asked the Minister of State for Defence what changes have been made in the rôle of the Army in Northern Ireland as a result of recent

discussions with the Prime Minister and other members of the Government of Northern Ireland.

Mr. Ian Gilmour: The rôle of the Army in Northern Ireland continues to be to assist the civil power in the maintenance of peace and order, in the firm and impartial enforcement of the law and in the combating of subversion.

Mr. McMaster: In view of the fact that the police have been disarmed and the local militias disbanded as a result of the Hunt Committee's Report, will my hon. Friend make sure that the Army is prepared without hestitation to protect people and property when firearms and explosives are used by seditious elements in their efforts to disrupt the economy—[HON. MEMBERS: "Reading.]— and to impose their political aims on Northern Ireland by force, and to apprehend those responsible?

Mr. Gilmour: The House will be aware that the Army is carrying out the duties of combating subversion and of dealing with trouble-makers who use firearms. There has been no change of policy.

Vietnam (British Troops)

Mr. Frank Allaun: asked the Minister of State for Defence if he will put in the Library a report of the remarks by Sir Geoffrey Baker, Chief of the General Staff, at Canberra on 28th January regarding the desirability of British troops fighting in Vietnam; whether such a statement was given prior approval; and if it is now the Government's intention to send British troops to Vietnam.

Lord Balniel: When answering a question at a Press interview, the Chief of the General Staff, speaking from a soldier's point of view, recalled the long tradition of comradeship in arms linking the British Australian and New Zealand Armies. From this point of view, he felt sad that the continuity of the tradition had been broken. He made clear that it would not be appropriate for him to comment on the political aspects of involvement in the Vietnam conflict. As the Prime Minister informed the hon. Member for South Ayrshire (Mr. Sillars) on 16th July, 1970, it has always been the Government's position that British troops should not be sent to Vietnam.— [Vol. 803, c. 1725.]

Mr. Allaun: We on this side of the House are very glad about the last part of the reply, but did not the General say that he would like to see British troops fighting alongside the Australians in Vietnam? Is it constitutionally correct for generals to express opinions on such matters publicly?

Lord Balniel: The Chief of General Staff was answering questions in an impromptu fashion and there is no verbatim record of what he said. My answer is a correct reflection of what he said. I think that the hon. Member for Salford, East (Mr. Frank Allaun) is simply trying to cause mischief. He is well aware that the General was simply expressing an emotional sentiment about troops who on a number of previous occasions had served alongside British troops. Equally, the General went out of his way to emphasise that it would not be appropriate for him to make any political comment.

Mr. Edwin Wainwright: Will the noble Lord say whether he agrees with what the General said and whether any admonition has been given to him for making such an awful statement?

Lord Balniel: I agree with the emotional sentiment which he expressed about troops who on a number of occasions in previous years had come to the help of British troops and that it was sad, in that respect alone, that we were not there to help them. But the Chief of the General Staff made it absolutely clear that he was in no position to comment on the political issue of the presence of British troops in Vietnam.

Later —

Mr. Frank Allaun: On a point of order. Mr. Speaker, I have waited until 3.30 p.m. before raising this matter. I wish to draw your attention to the Answer to Question No. 30 given to me by the Minister of State for Defence. You may recall that the Minister of State said that my Question was making mischief. If it is making mischief to oppose the sending of American troops to Vietnam or any suggestion of British troops being sent there, then I and many hon. Members plead guilty.

Mr. Speaker: Order. I cannot allow the hon. Gentleman to proceed. That is not a point of order. It is an argument.

It may or may not be valid, but it is not a point of order.

Mr. Allaun: Further to that point of order. I am asking the Minister of State to withdraw—…

Mr. Speaker: Order. Again that is not a point of order. I have no doubt that the Minister of State heard what the hon. Gentleman said.

Mr. Dalyell: Further to the point of order. As one who previously tried to raise this subject under Standing Order No. 9, may I ask whether, to save the time of the House, we could have a clarification from the Minister responsible of exactly what he meant in answer to my hon. Friend?

Mr. Speaker: Not under the guise of a point of order.

Mr. George Thomson: Further to that point of order. With respect, I understood —…

Mr. Speaker: Order. I have ruled that it is not a point of order. The right hon. Gentleman may raise a fresh one.

Mr. George Thomson: On a fresh point of order. I understood, with respect, Mr. Speaker, that my hon. Friend was coming to the point that, in view of the unsatisfactory answer by the Minister, he wished to raise this matter on the Adjournment. May I further say that I had intended to make these points to the Minister if, Mr. Speaker, you had not at that point called the Prime Minister's Questions.

Mr. Speaker: Order. Again, I do not think that was a point of order. If the hon. Gentleman wishes to raise the matter on the Adjournment, he should have done so at the appropriate time.

Mr. Allaun: Mr. Speaker, in view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek raise the matter on the Adjournment at the earliest possible moment.

Oral Answers to Questions — CIVIL SERVANTS (PARTY POLITICAL ACTIVITY)

Mr. Sheldon: asked the Prime Minister what action he is taking to ensure that those appointed to the Civil Service


by his own authority do not engage in party political activity.

The Prime Minister (Mr. Edward Heath): There are well-known rules governing the political activities of civil servants which all are expected to observe.

Mr. Sheldon: While not wishing to limit the useful rôle played by outsiders coming into the Civil Service, may I ask the right hon. Gentleman whether he is aware that the full-time paid employment in the Civil Service of someone who has played a leading part in party politics in a prominent local authority is a departure from existing practice? Should not this departure be at least notified to the House?

The Prime Minister: Under past Administrations people of known political views and activities have been brought into the Government. The rule is very clear, and it is that civil servants of the grade of executive officer and above may take part in local political activities with the permission of their department. As far as I know, this rule has been observed in every case. If people are taking part in local government or local activities, it is with the permission of their department.

Mr. Harold Wilson: Is the Prime Minister aware that the rules clearly laid down by Lord Attlee's Government have been followed ever since and have been very strictly applied? Is he further aware that in the case of an appointment to No. 10 Downing Street on 1st January, 1969, an incoming temporary civil servant, who was a member of a local authority, not only was required to resign his seat on a local authority immediately, by my direction, but was not even allowed to attend the following evening to tender his resignation in person? Obviously there is a very big difference in the way in which this matter is being handled as between the Labour and Conservative Governments.

The Prime Minister: I do not think that there is any difference at all. I know nothing of the case to which the right hon. Gentleman refers. But it would appear that the person concerned must either have asked for permission to continue and have been refused or must have decided not to go on with his activities. Anyone engaged in local government activities or local political activities is fully

entitled to ask the department for permission to continue, and it must be the department which decides whether he can continue.

Mr. Wilson: Is the right hon. Gentleman aware that I should be extremely happy if he looked up all the papers in that case? I will give him all the information he needs. Perhaps he will say whether anyone who has been at No. 10, in the Cabinet Office or the Treasury, in a senior administrative position, has not been required immediately to resign any local government appointment he held?

The Prime Minister: Obviously I should have to search the records in order to answer that question. But the point of principle remains—that anyone below executive officer grade can continue his activities without permission, and that anyone of executive officer grade or above may, under the spresent rules, ask for permission to continue his activities, and it would rest with the head of the Government to decide whether it was appropriate for him to do so. That policy has been pursued.

Mr. Wilson: The rules have been applied very strictly by all Governments from Lord Attlee's day onwards. If it is a fact, as the right hon. Gentleman says, that he is using the discretion of giving or refusing approval in the way that he is doing, it is a very considerable deterioration in the standards which have been applied by every previous Government.

The Prime Minister: These matters are decided by the head of the department and not by me as head of the Government. As far as I know, no case has been referred to me as head of the Government. The decisions have been taken in the normal way by the Departments concerned in any cases which have arisen.

Oral Answers to Questions — STANDING COMMISSION ON MUSEUMS AND GALLERIES

Mr. Carter: asked the Prime Minister what recent appointments he has made to the Standing Commission on Museums and Galleries.

The Prime Minister: The Earl of Rosse has been reappointed as Chairman, and Dame Mary Smieton appointed as a member.

Mr. Carter: I thank the Prime Minister for his reply. Will he tell the House what consultations he had with the Standing Commission before the Government announced their intention to impose entrance charges on museums and galleries and, if such consultations took place, what was the opinion of the Standing Commission?

The Prime Minister: That is quite a different question from the appointments which have been made to the Standing Commission. As the Standing Commission has indicated, no consultations were held, because of the general nature of the arrangement which was being announced by my right hon. Friend the Chancellor of the Exchequer in his statement. It was not possible to carry on individual consultations with the Standing Commission without revealing to it the general nature of the changes in financial policy which were being made.

Rear-Admiral Morgan-Giles: Will the Prime Minister discuss with the Commission a special case, namely, the preservation of H.M.S. "Belfast" as a museum ship?

The Prime Minister: I am quite prepared to arrange for such discussions to be held with the appropriate museum.

Oral Answers to Questions — ROYAL COMMISSION FOR THE EXHIBITION OF 1851

Mr. Carter: asked the Prime Minister if he will attend the next meeting of the Royal Commission for the Exhibition of 1851 in his capacity as an ex-officio member, and report the Commission's progress to the House.

The Prime Minister: No, Sir. My right hon. Friend the Home Secretary normally presents such reports to the House.

Mr. Carter: Is the Prime Minister aware that the Royal Commission annually awards scholarships to students to study science and engineering in industry and that many of these awards may be with Rolls-Royce? If they are, will he, as Prime Minister, address those students and tell them how, at a stroke, he destroyed their future prospects?

The Prime Minister: It needs a great deal of ingenuity to stretch a perfectly

sound Question into such a ridiculous supplementary question as that. When a great British company finds it necessary to apply for the appointment of a receiver, I should not have thought that it was a matter for hilarity on the part of hon. Gentlemen opposite. One of the main purposes of the Commission is to provide scholarships for members of the old and new Commonwealth. I should have thought that it was a matter of satisfaction that, of the previous scholarship holders, 10 per cent. have become Fellows of the Royal Society and seven are Nobel Prize winners.

Oral Answers to Questions — PRIME MINISTER OF FRANCE

Mr. Marten: asked the Prime Minister if he will invite the French Prime Minister to visit Great Britain.

The Prime Minister: I have indicated to the French Prime Minister that he will be welcome here whenever he is able to come.

Mr. Marten: I am delighted to hear that news. Now that the Common Market has agreed to go ahead towards economic and monetary union, would not such a visit be a convenient way for the French Prime Minister to inform himself of the feelings of the people of this country about these and similar matters?

The Prime Minister: The French Prime Minister has all the normal means of diplomacy open to him to keep himself informed about the views of people in Britain. If he were able to come here on a visit, which we should welcome, he would no doubt have an opportunity of speaking to the British people and explaining his views, which no doubt he would do in English.

Mr. Heffer: Will the right hon. Gentleman indicate to the French Prime Minister, when he does meet him, that even those people who are keen on European unity cannot possibly accept the agricultural system of the Common Market, and that it must be a subject of renegotiation before Britain could possibly accept entry into the E.E.C.?

The Prime Minister: I had an opportunity of talking to the French President and the French Prime Minister in Paris in November, but I was not able to


make that point to them because in the attempted negotiations by the previous Administration and at the beginning of the negotiations of this Administration, it was indicated that we did accept the common agricultural policy as a system.

Mr. St. John-Stevas: Does the Prime Minister realise that, whatever may be our views on the Common Market, there are hon. Members on both sides of the House who welcome the restoration of l'entente cordiale with France?

The Prime Minister: Yes, we were all very glad to hear the words of the President of France in his Press conference. I personally welcome the closer and much happier relations we now have with the French people.

Mr. Molloy: If the Prime Minister has discussions with the French Prime Minister, will he tell him that, despite Press reports and other forms of mass media propaganda, the majority of the British people are apprehensive about joining the Common Market and that, if we were to do so, we have no desire to smash E.F.T.A.?

The Prime Minister: The hon. Gentleman is quite right; the position of the E.F.T.A. countries is very important. As he knows, two of them are already negotiating with us for full membership and the others are in process of discussions about the particular arrangements they want.

Oral Answers to Questions — SOUTH-EAST WALES

Mr. Roy Hughes: asked the Prime Minister if he will pay an official visit to South-East Wales.

The Prime Minister: I have at present no plans to do so.

Mr. Hughes: Is the Prime Minister aware that, had he been in Cardiff on 23rd January, he would have witnessed a massive demonstration against the Industrial Relations Bill? Is he further aware that he has no mandate in Wales for this vicious class legislation, since at the General Election in Wales the Tory Party lost no fewer than 10 deposits and out of 36 seats won only seven in what for the Tory Party was a good General Election?

The Prime Minister: We have a mandate for the Industrial Relations Bill, and it will be put on the Statute Book.

Mr. George Thomas: While I understand the Prime Minister's reluctance to come to Wales, if he decides so to do, will he be good enough to bring with him the phantom Secretary of State for Wales so that he might have a familiarisation tour of the Principality?

The Prime Minister: The right hon. Gentleman knows that I always try to give him instant pleasure, and we shall both be in Cardiff on 2nd and 3rd April.

Oral Answers to Questions — SCOTTISH ECONOMIC PLANNING COUNCIL

Mr. Douglas: asked the Prime Minister if he will arrange to meet the members of the Scottish Economic Planning Council on his next visit to Scotland.

The Prime Minister: I will certainly consider this suggestion when the membership of the new Scottish Economic Council has been settled.

Mr. Douglas: I thank the right hon. Gentleman for his interesting reply. Does he accept that the result of the Government's economic policies for Scotland have been immediately disastrous and that he has the responsibility of telling the people of Scotland as soon as he can when they might expect alleviation of the current economic position, whether it be in days, weeks, or months—or must we await the return of a Labour Government?

The Prime Minister: As the people of Scotland have learnt, under the Labour Government, from 1966 to 1970, the number of employed fell by 82,000. My right hon. Friend announced at the end of last week that West Central Scotland will in future have the advantages of special development area status.

Mr. Maclennan: While I recognise that the incompetence of the Government made these special measures necessary for Central Scotland, does the Prime Minister realise that they amount to the complete abnegation of economic planning and put considerable burdens and difficulties on other parts of Scotland? What will he do about that?

The Prime Minister: If the hon. Gentleman is suggesting that he does not want this area to have special status, he had better say so quite plainly. Alternatively, he is asking that every area in the country should have exactly the same treatment, and that is obviously not a sensible way of treating the special problems of a special area.

Mr. William Hamilton: Does that reply mean that the Government are reverting to the policy of special growth points as distinct from development areas?

The Prime Minister: It has always been the policy of the present Government and my party to concentrate resources where they are most needed, and, as this has now become necessary in West Central Scotland, we propose to do so.

Mr. Harold Wilson: Following the question by my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan), does the right hon. Gentleman recall the Opposition spokesman in those days opposing the Highlands and Islands Development Board, which has done so much for those areas, as "pure Marxism"? Is the right hon. Gentleman as part of his policies for Scotland continuing that "Marxism"?

The Prime Minister: As the right hon. Gentleman will know if he refreshes his memory, there were particular parts of that Bill regarding the powers of compulsory purchase given to the Highlands and Islands Development Board to which, quite rightly, we took exception. My right hon. Friend, as the Leader of the Opposition knows, is proposing to continue with that Board but not to use the powers to which we object.

Mr. Ross: Is the Prime Minister suggesting that the announcement which was made unexpectedly last week, in advance of the announcement on Rolls-Royce, will have any effect this year on a situation which was already serious and has been aggravated by Government decisions?

The Prime Minister: We hope that it will have an impact on this area as early as industrialists can be persuaded to accept the special advantages and to build factories.

POST OFFICE (DISPUTE)

Mrs. Castle (by Private Notice): asked the Secretary of State for Employment whether he will make a statement on the steps he now proposes to take to settle the postal workers' dispute.

The Secretary of State for Employment (Mr. Robert Carr): Since I reported to the House on 4th February, I have continued to keep in close touch with the situation, and my Department contacted both the union and the Post Office as recently as this morning. These contacts have, however, confirmed that both sides still hold firmly to their previous positions.
I reaffirm my readiness to hold further discussions with the parties just as soon as I have any indications that this would be useful, but I regret to tell the House that my judgment is that any intervention on my part at this juncture would not achieve the result which we all desire.
I shall, of course, continue to keep in touch with both sides, and I repeat my promise to keep the House informed as soon as there is anything to report.

Mrs. Castle: Is the right hon. Gentleman aware that we on this side of the House have been very patient with him? [HON. MEMBERS: "Oh."] The Secretary of State said that he was "waiting for Wilberforce". Well, we have now had Wilberforce. Is he aware that that Report sets out certain guiding principles, a concept of which the right hon. Gentleman is very fond, which are all relevant to the postal workers' dispute; namely, the principle that the workers in a vital public service should be properly paid if their claim is to be fairly considered irrespective of the profitability of the industry? l s he not aware that, contrary to the impression he has given in his statement, the Union of Post Office Workers has repeated its willingness to get round the negotiating table and has merely been met by a stony refusal from the Chairman of the Post Office Corporation to admit that there is even anything to discuss? In view of that, will the right hon. Gentleman admit that it is now clear who is responsible for continuing the strike, and will he recognise that his continuing inactivity is quite intolerable


and that it is his duty to call the two parties together and to get this dispute under negotiation again?

Mr. Carr: I await with interest the experience of the right hon. Lady's impatience. The right hon. Lady, who for a considerable time occupied the office I now hold, must know that it is a matter of judgment—and it is a difficult matter of judgment on which there can be differences of opinion—as to when to intervene and with what success. I am sure she will also know that ill-chosen timing can be counter-productive. On two occasions I have had personal meetings with both sides, and both sides, including the union, have expressed their satisfaction that I and my Department have done all in these difficult circumstances which they could have expected my Department, or anybody who held my office, to do. Therefore, at least the parties believe that I have done all I can do. When I can do more, and judge I can do more, I shall do so. But in industrial situations we sometimes reach the point at which the position of both sides is so firm and so hard that it is difficult to bring them together. It must be realised that the Post Office feels genuinely that it has offered all it can offer without the need for an immediate application for a further increase in postal charges. It says—and I repeat this because it is the Post Office's view—that it will go to arbitration and will abide by it. And it believes that the Union of Post Office Workers should go to arbitration, as other Post Office unions have done in the last few months.

Sir D. Walker-Smith: Following the right hon. Lady's reference to the Wilber-force Report, could my right hon. Friend say whether the Post Office workers have considered or commented upon the clear and cogent references in that report to industrial arbitration and the obligations arising thereunder? Is it not inconceivable that where such obligations exist no acceptable chairman can be found from among all the citizens of this country who can be counted on to do justice in this matter?

Mr. Carr: I am quite sure that were there a willingness to consider arbitration there would not be any real difficulty in finding suitable arbitrators.
As to the parties' attitude to all that was said in the Wilberforce Report, I do not believe that the union has at the moment commented on the point to which my right hon. and learned Friend referred. I really think that a little longer should be given for study of what was quite a long and deeply argued report.

Mr. Hattersley: Why does the right hon. Gentleman continue to answer questions as though his Department was available to conciliate in the Walter Monckton fashion, when clearly it is largely responsible for the continuation of the dispute by implementation of Government policy?

Mr. Carr: I can only say that Mr. Jackson believes that we are conciliating in the best traditions of the Department.

Sir G. Nabarro: Will my right hon. Friend bear in mind that the overwhelming majority of sensible people do not want a ninepenny post? Will he also bear carefully in mind that the Wilberforce settlement of 10·;9 per cent., referred to yesterday, would be excessive in the case of the Post Office workers having regard to their large award last year?

Mr. Carr: I take note of my hon. Friend's remarks, but I am sure he will understand that I do not wish to comment on them.

Mr. Golding: Will the Secretary of State make it quite clear that the Post Office has unilaterally departed from the principles of pay determination and that this makes it very difficult to agree terms of reference for arbitration?
May I also ask the right hon. Gentleman to turn his attention to the telephonists' claim and to make it clear that productivity in the telephone service increased by 8 per cent. between 1964 and 1970 and is expected to increase by 10½ per cent. in coming years? Does the right hon. Gentleman realise that the great bitterness which has been injected will jeopardise this very fine record?

Mr. Carr: These are all difficult matters about which I know people feel strongly. But I really must ask hon. Members, if they have not already done so, to look at the terms of the arbitration agreement


which this union signed as recently as last August and which other unions in the Post Office, despite the absence as yet of a permanent chairman, have been prepared to use in recent months.

Mr. Harold Wilson: Is the right hon. Gentleman aware that the whole House will agree with what he said about it being a matter for his discretion, or that of anyone holding his position, to decide when to intervene? Is the right hon. Gentleman also aware that, contrary to some views which may have been expressed by some of my hon. Friends, I have every confidence that he will use that discretion to intervene, as he has done on six previous occasions, whenever he sees Vic Feather on the move?

Hon. Members: Answer.

Mr. Carr: I hardly thought that the comment of the Leader of the Opposition was worthy of an answer.

Sir Harmar Nicholls: On a point of order. Did not the stupidity of that last supplementary—…

Hon. Members: No. Sit down.

Mr. Speaker: That does not sound like a real point of order at all.

Sir Harmar Nicholls: On a point of order. Did it not confirm the desirability of calling hon. Members alternately instead of having two questions running from one side of the House?

Mr. Speaker: No point of order can arise on the exercise of the discretion of the Chair.

Mr. Mawby: Does my right hon. Friend accept that, while there have been suspicions that arbitration would not be impartial, a close look at the Wilberforce Report shows that these suspicions can now be ruled out? Would it not, therefore, be a good idea for the parties to be prepared to sit down and put their facts before arbitration? After all, the whole principle of comparability and so on could then be looked at as cold fact rather than people getting excited with one another.

Mr. Carr: I should certainly have hoped that both the content of the argument and recommendations of the Wilberforce Committee would have done a great

deal to confirm what should be the confident use of different forms of arbitration in this country. I very much hope that the report will be studied and that that lesson will be drawn from it.

Mr. Orme: Is the Secretary of State aware that it is about time that he stopped acting as a publicity officer for the Post Office Board? Is the right hon. Gentleman aware that, with the country facing decimalisation, the closure of the banks, and the inconvenience arising out of this justifiable claim by the Post Office workers, he has a responsibility, as the Minister, to bring the two sides together and to allow negotiations to take place and that, if he acted impartially, negotiations could take place and a settlement brought about in this dispute?

Mr. Carr: If I wish to act and speak responsibly and impartially, as I have, I shall not follow the hon. Gentleman's example.

Mr. Geoffrey Finsberg: Will my right hon. Friend convey to Mr. Jackson that it might be helpful if he would study carefully the Wilberforce Report and that, if he felt that it was proved that this was open and fair arbitration, his union might agree to go to arbitration without binding itself to accept any decision? I think that this at least would be in the public interest.

Mr. Carr: I have made clear before that I have probed the union's position in depth as to its willingness to accept arbitration, or anything similar under any other name. I repeat, there is no machinery of inquiry or arbitration, call it what one will, which I have ruled out. The union, as well as the employers, is well aware of that fact.

Mrs. Castle: In view of the increasing urgency of the situation, because of the mounting inconvenience to the public and to the business world and also the imminence of decimalisation day, with all the disorganisation which that will bring, may I ask whether the right hon. Gentleman will assure the House that he will make another statement on Monday so that we can be kept informed whether he has any movement going at all?

Mr. Carr: Of course I shall, because I know, as well as anybody on either side of the House and the public, how urgent


it is to bring the dispute to an end. I appeal to hon. Members to realise that there was once a tradition in the House that we did not press these matters too hard, because, on the whole—[Interruption.]—question and answer of this kind tends to harden and make the attitudes and positions of parties more inflexible rather than flexible. I hope that the House will bear that in mind.

BUSINESS OF THE HOUSE

Mr. Harold Wilson: May I ask the Leader of the House to state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Yes, Sir. The business for next week will be as follows:
MONDAY, 15TH FEBRUARY—Second Reading of the Consolidated Fund Bill.
TUESDAY, 16TH FEBRUARY and WEDNESDAY, 17TH FEBRUARY—Industrial Relations Bill: Committee stage (7th and 8th Allotted Days).
At the end on Tuesday—remaining stages of the Consolidated Fund Bill.
THURSDAY, 18TH FEBRUARY—There will be a debate on an Opposition censure Motion relating to prices, unemployment and the industrial situation.
FRIDAY, 19TH FEBRUARY—Private Members' Motions.
MONDAY, 22ND FEBRUARY—Debate on a Motion to take note of the White Paper on Public Expenditure 1969–70 to 1974–75 (Command No. 4578).

Mr. Harold Wilson: With regard to what he has said about the debate a week on Monday, it is clear that the Government have decided that they will give only one day for the White Paper on public expenditure. Is the right hon. Gentleman aware that if we accept that we do so under protest, but understanding, as I think the right hon. Gentleman said, that in his view there are special reasons this year why it should be a one-day debate, and that he proposes, if he is here next year, to adhere to the practice which we instituted of a two-day debate on the White Paper on Public Expenditure?
As I understand what the right hon. Gentleman the Secretary of State for Employment has just said, he hopes to make a statement on Monday on the Post Office dispute. I welcome that. We recognise that yesterday the right hon. Gentleman was not in a position in his statement on the power workers' dispute to say when he thought the two sides would get together. Can the right hon. Gentleman arrange on Monday, either in the same statement or in a separate one, to give the House an up-to-date account of the position of the power workers' dispute as well? Clearly we shall want, in the light of those two issues, to consider our further action, not least in relation to the censure Motion on Thursday.

Mr. Whitelaw: I am grateful to the right hon. Gentleman for his remarks about the public expenditure debate. I made it clear to the House before that, as we had a two-day debate in the autumn, I could not promise the House a two-day debate on this occasion, but I am clearly on record, and I welcome the opportunity to put it on record again, as having given a clear commitment to have a two-day debate in all future years.
I would have done my best to have had a two-day debate this year, but the Opposition, very much within their rights, decided to put down a censure Motion for next Thursday, which my right hon. and hon. Friends are only too anxious to rebut at the earliest possible opportunity. In those circumstances, it will be a one-day debate this year, but I give the clear undertaking that it will be two days in future.

Mr. Harold Wilson: Is the right hon. Gentleman aware that his last few words rather derogate from what we thought was a clear assurance? Is he aware that putting down a censure Motion is within the discretion of any Opposition at any time? If he is suggesting that we should have had a two-day debate if the Opposition had agreed to provide a Supply Day, that is not in accordance with the assurance which he has given. It is two days of Government time which I thought he had undertaken to provide for future years. I hope that the right hon. Gentleman will not say that two days are conditional on the Opposition—if the rôles of the two parties have not been reversed


by then—giving a Supply Day for the purpose of a two-day debate. I thought that his assurance was that it would be two days of Government time, and I hope that the right hon. Gentleman will make that clear.

Mr. Whitelaw: I have no wish to derogate from what I said. It was the position in the past, when the right hon. Gentleman was in power, that the Opposition of the day—and I was requested for it—gave a Supply Day, making a second day for the public expenditure debate, but lest there be any doubt, and in the interests of the House, I give the assurance that in future years there will be two days and they will be Government time.

Mr. Fletcher-Cooke: Can my right hon. Friend say when the White Papers on the Reform of Local Government are likely to be laid?

Mr. Whitelaw: The White Papers on Local Government in England and Scotland and the Consultative Document on Wales will be published on Tuesday of next week, at 12 noon. I know that right hon. and hon. Members will wish to have time to study these detailed documents, and as there will be opportunities, which the Government will provide, for debate and discussion over a long period of time, I hope the House will agree that a statement should not be made on the day of publication.

Mr. Palmer: Is the right hon. Gentleman now in a position to provide time for a debate on the Report of the Select Committee on Science and Technology in the last Parliament on Defence Research?

Mr. Whitelaw: I recognise the importance of this Report. I recognise, too, the value that was placed on it by interests outside the House. I could not guarantee to give time for such a debate in the near future, but it is one of those which can certainly be carefully considered for the future.

Mr. Emery: Will my right hon. Friend find time on Monday to enable him to transfer the Committee and remaining stages of the Rolls-Royce (Purchase) Bill which it is suggested should be taken after the Second Reading this evening? It will not have escaped my right hon. Friend's notice that there are likely to be Amend-

ments to the Bill which, because of the procedure, cannot be handed in until the Bill has been read a Second Time, and we run into the situation, which was condemned by the Conservative Party when it was in Opposition, of having debated in the House Amendments which may or may not be roneoed, and which cannot be known by most hon. Members who are considering them. That is an unsatisfactory position.
Even accepting the great urgency of the matter, I believe that another place will not be dealing with this matter until next week. Could not this be dealt with as the first business on Monday instead of late tonight?

Mr. Whitelaw: I recognise the importance of the point put forward by my hon. Friend. I also recognise, as I think all Governments have done for a long time, the undesirability of proceeding in this way in normal circumstances. However, I think that there are exceptional circumstances here. I think that it is in the national interest, and it must be judged if it is so, but I believe it to be, for the Bill, if the House feels able to do it, to go through all its stages today. That is why the Government are asking the House, in an axceptional case, to do it today.

Mr. Harold Wilson: Is the right hon. Gentleman aware that, whatever our feelings about the handling of the Rolls-Royce question, we agree with what he has said about it being undesirable, in principle, to handle a Bill in this way, but in view of the urgency we feel it right that all its stages should be completed on this occasion? As for the difficulty in which the House is placed by the requirements of procedure, manuscript Amendments, and so on, is the right hon. Gentleman aware that hon. Members will have heard on the B.B.C. at lunchtime the terms of the Amendment with which the hon. Gentleman is concerned?

Mr. Whitelaw: I am grateful to the right hon. Gentleman for what he has said about the procedure on this occasion and, like the right hon. Gentleman, I should like to make it clear how undesirable this is as a general practice. and that it can be justified only in very exceptional circumstances.

Mr. Crouch: I imagine that one of the most difficult tasks facing my right hon. Friend is that of finding time for the House to debate as soon as possible some of the urgent issues facing this country. Can he say whether he is considering finding time in the near future for a two-day debate on the Roskill Commission Report?

Mr. Whitelaw: I have given a clear undertaking that there will be a one-day debate on the Roskill Commission Report and that it will take place before Easter.

Mr. George Thomas: Is the right hon. Gentleman aware that, in view of the worsening economic situation in Wales and the complete demoralisation of the Government in the Welsh Grand Committee, where they are defeated from time to time, there is considerable anger in Wales at the right hon. Gentleman's declining to give us time to debate Welsh affairs on the Floor of the House? Is he aware that there is a strong feeling that we are entitled to a better deal in this House?

Mr. Whitelaw: I think that all I have done so far in answer to the right hon. Gentleman is to say that I could not find time in the immediate future for a debate in the House on Welsh affairs. I have never ruled out —"never" is a very unwise word—and I am not ruling out the possibility, at some stages, as there have been in the past, of debates on Wales in the House, but not next week. There are opportunities for debate in the Welsh Grand Committee, and the right hon. Gentleman is as well aware of these as I am.

Mr. Allason: As the business statement shows that there cannot be a debate on the Roskill Commission Report before the other place debates it, may we have an assurance that it will be debated in both Houses on the same day? It will be unsatisfactory to debate the Report here after it has been debated in the other place.

Mr. Whitelaw: I cannot undertake that the Report will be debated here on the same day as it is debated in the other place. I do not really see much difficulty one way or the other as to which House happens to debate it first.

Mr. McNamara: Is the right hon. Gentleman aware that the Statutory Instrument relating to the cut in the grant for fishing vessels has been delayed in the Statutory Instruments Committee? Can the right hon. Gentleman inform the House why this Statutory Instrument has been delayed? It is now five months since it was laid before the House, and many of my constituents who are engaged in the fishing industry are concerned about this issue. When can we hope to have it debated on the Floor of the House? What have the Government been up to? Have they been unconstitutional or otherwise?

Mr. Whitelaw: It has not been a question of the Government, so far as I can see. This Order is still with the Select Committee on Statutory Instruments, and it is normal and usual to defer consideration in this House until it has left that Committee; but I will look into the question and find out why it is still there.

Mr. Richard: Can the right hon. Gentleman help us a little about the publication of the White Paper on the Government's proposals on commercial radio? He will know that there were rumours that this was to come out in November. Then there were rumours that it was coming in December. Then there were rumours that it was coming in January. Now one hears that it will be shortly before Easter. Can he tell us which year?

Mr. Whitelaw: I cannot tell the hon. Gentleman exactly when the White Paper will be published. All I will say is that when the Government are ready to publish their proposals in the White Paper they will publish them.

Mr. Richard: Which year?

Mr. Whitelaw: In the very near future.

Mr. Braine: Turning back to the question asked by my hon. Friend the Member for Hemel Hempstead (Mr. Allason) about the Roskill Commission, is my right hon. Friend aware that the implications of this Report touch very closely upon what this House is supposed to represent—the interests of vast numbers of people and the expenditure of illimitable sums of money? In that event, would it not at least be proper for the subject to be discussed in this House at the same time as it is discussed in the


House of Lords, or before, because it is this House which bears the ultimate responsibility for what is done?

Mr. Whitelaw: I fully accept what my hon. Friend says about the position of this House—as will everyone in it. I still, frankly, do not see any particular reason why it matters which House happens to debate this subject first.

Mr. Ashton: Can the right hon. Gentleman tell us why he is allowing the solicitors to have a pay increase on Monday, without the matter being debated by the House? Is he aware that there is a Statutory Instrument on conveyancing charges, which I and several of my hon. Friends have prayed against, which expires on Monday? Would it not follow custom and practice, when a Prayer has been laid, especially after two P.I.B. reports on this subject, that the House should debate it without this pay increase being allowed to go through?

Mr. Whitelaw: No Government of any party have ever undertaken to give time for all the Prayers which may be put on the Order Paper, and to that position I must stand.

Mr. Kilfedder: When shall we have a statement giving the results of the talks between the Northern Ireland Government and this Government about what will replace the development grants which Northern Ireland has had over the past years? Second, can my right hon. Friend promise a debate on Northern Ireland at an early date, so that we can discuss the general economic state of the Province, with a view to helping Northern Ireland?

Mr. Whitelaw: I am afraid that I could not promise time for a debate on Northern Ireland in the near future. However, I will certainly ensure that my hon. Friend's remarks are brought to the attention of my various right hon. Friends who are involved in matters in Northern Ireland—the Home Secretary and the Minister of State for Defence—and I know that they will wish to keep the House as fully informed as possible about the problems there.

Mr. Pavitt: In the light of the White Papers on Local Government, which are to be published next week, when shall we have a statement of Government policy on restructuring the National Health Service? Will this take the form

of Green Paper Mark III, or will it be a White Paper, and will it be made very speedily after the local government White Paper?

Mr. Whitelaw: I cannot give the hon. Gentleman an answer to this question today, but I will certainly see that his remarks are passed to my right hon. Friend the Secretary of State for Social Services. I will speak to my right hon. Friend myself about it in order that I may be fully informed as to the answers to the questions which the hon. Gentleman has raised.

Mr. Dalyell: In view of the many attempts during the week to raise the issue of our responsibilities towards Laos and the American invasion, could the right hon. Gentleman arrange for a statement next week to state the Government's position clearly, since it looks at the moment as if there is unthinking support of the Americans?

Mr. Whitelaw: I think that my right hon. Friend the Foreign Secretary made the position of this Government and their position as co-Chairman absolutely clear in answer to a Private Notice Question this week. I will, of course, draw the attention of my right hon. Friends to the hon. Member's remarks, and if a further statement will be helpful in the House, or if my right hon. Friend feels that there is something of which the House should be informed, I am sure that he would be most anxious to do so.

Mr. Skinner: Would the right hon. Gentleman rearrange his timetable in order to investigate why increasingly larger amounts of external mail are being delivered to this House, which is an unwarranted interference in an honest industrial dispute, and, to use his right hon. Friend's words, in order to show that he does not want to harden the views of the two sides? [Interruption.]

Mr. Whitelaw: I am sure that the hon. Member will realise that, through no fault of him or me, I did not hear his concluding remarks. I do not know anything—[HoN. MEMBERS: "Hear, hear."] I do not know anything—[Laughter.] If that pleases right hon. and hon. Gentlemen, I am happy. I do not know anything about what the hon. Gentleman has raised; I will look into the matter.

Sir G. Nabarro: Will my right hon. Friend remember that, a fortnight ago yesterday, he promised a statement from the Prime Minister on the new review bodies for the higher echelons of the public service, and their pay and conditions? Although of course we do not fall within that context, would he bear in mind that he has further promised a statement on the review body for Members of Parliament and their conditions of work? As all these matters have now been procrastinated over for nearly two years, could we have statements fairly soon, both from the Prime Minister and from the Leader of the House?

Mr. Whitelaw: I have made it clear that my right hon. Friend would make a statement on the review bodies as a whole. As for the reference of Ministers' and Members' salaries to one of the new review bodies when it is set up, I undertook, in answer to the right hon. Member for Sowerby (Mr. Houghton), that this would be done as soon as the review bodies concerned were set up. I did not know that I had undertaken to give a further statement. I thought that I undertook that as soon as they were set up this matter would be referred to them.

Mr. Arthur Lewis: Can I assume that the right hon. Gentleman is aware that, for the last 14 days, he has been trying to get through on the nod the question of the pension of Mr. Speaker's predecessor? As he has been unsuccessful, I assume that he will eventually put down a suspension Motion. As old-aged pensioners generally, the power workers and the Post Office workers are vitally interested in this subject, will he assure me and the House that he will not put the suspension Motion down for Monday after the Consolidated Fund Bill, but that he will put it down at a reasonable time, so that hon. Members and the public who may be interested will be able to take note of this subject?

Mr. Whitelaw: I am afraid that I am not prepared to give the hon. Gentleman any assurance about this matter. I am still hoping that he might feel that the correct course, in all the circumstances, is to allow this Motion to go through, particularly as he knows very well that a Bill has to follow the Resolution. I should have thought that this was the obvious course for him.

Several Hon. Members: rose ——

Mr. Speaker: Order. I am afraid that we must move on.

OLD BAILEY (MR. SPEAKER'S EVIDENCE)

Mr. Arthur Lewis: On a point of order. You will recollect, Mr. Speaker, that I have given you private notice of a matter which I feel that the House should be in the knowledge of. Can I ask you whether you are able to say when and if you will be able to make a statement upon the subject, which is within our knowledge—[Laughter.]—which I think you would like to know a bit more—[Laughter.]—which I feel that you, Mr. Speaker, would like to reveal to the House —[Laughter.] Mr. Speaker, only you and I know how serious this is—[Laughter.] I repeat that only you and I, Mr. Speaker, know how serious the matter is. For that reason, I have left it to you—[Laughter.]

An Hon. Member: It is something even his best friends will not tell him.

Mr. Arthur Lewis: —to make a statement on this, which I regard as a very important subject which I do not wish to reveal—[Laughter.] Therefore, may I ask you to give consideration now to making a statement at some time suitable to your convenience?

Mr. Speaker: In view of the way in which the hon. Member for West Ham, North (Mr. Arthur Lewis) has put his point of order, I think that it would be better if I made the statement straight away.
The matter which the hon. Gentleman raised with me was the circumstances in which I went to give evidence in a criminal proceeding at the Old Bailey recently. The reason I went was that I had already given evidence in the magistrates' court. I was bound over to give evidence at the Old Bailey. There is no privilege which prevents a Member from being called to give evidence when the House is not actually sitting. Those were the circumstances in which I gave evidence.

Mr. Lewis: I am much obliged to you for making that statement, Mr. Speaker. You will recollect that when


I raised this matter with you—it is not a laughable matter; it is a serious matter—I then pointed out to you that when you went to give evidence at the magistrates' court you were Mr. Selwyn Lloyd, but subsequently you ceased to be such—[Interruption.]—this is not a laughable matter.

Mr. Speaker: Order. If the hon. Gentleman wishes to pursue this matter, it must be done in the proper way by some form of discussion on a Motion. It cannot be pursued further by means of points of order.

Mr. Lewis: Mr. Speaker, other than by tabling a Motion of criticism, can you tell me how, in the knowledge of the point which I have put to you, this matter can be raised in the House so that we can have a discussion on the general principle rather than on the particular case the knowledge of which is in your possession?

Mr. Harold Wilson: Further to that point of order, Mr. Speaker. Surely the rules of the House are absolutely clear about this and were not so long ago asserted in the High Court. No hon. Member can be frivolously subpoenaed, and certainly not when the House is sitting. However, in this particular matter, which you reported to the House just now, Mr. Speaker, the whole House—I am sure that I speak for both sides of the House—has the fullest confidence in your ability to decide what things you should do as Speaker of the House of Commons and what things you are entitled to do in a private capacity as a citizen feeling that you have something to contribute to an important public trial.
In those circumstances, Mr. Speaker, as we have very important business, including both a statement and a very important Bill to get through all its stages, would it not be better if the whole House were to agree that we should now make progress?

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Further to that point of order, Mr. Speaker. I am sure that my right hon. and hon. Friends would wish me to associate them with the remarks which have just been made by

the right hon. Gentleman the Leader of the Opposition.

Mr. Speaker: I am grateful to both right hon. Gentlemen.

QUESTIONS TO MINISTERS

Mr. Hugh Jenkins: On a point of order, Mr. Speaker. I hesitate to detain the House longer. Mr. Speaker, you have introduced a new custom—one understands why—that all Members who wish to ask business questions are not necessarily called to ask them. The result has been that in the last three weeks you have excluded one or two Members from asking business questions. This is a change which I think that we must accept—[HON. MEMBERS: "No."]—it seems
that some Members do not want to accept it. If you are making this change, Mr.peaker—there may be arguments against it—would you take care to see that it is not always the same Member who is excluded, in case a new precedent arises in which it becomes the custom and the practice of the House that all Members are allowed to ask business questions except the hon. Member for Putney?

Mr. Speaker: I will certainly see that that is not the case. This is a difficult matter for the Chair. I ask hon. Members if possible not to repeat a question which has already been asked, because that does take up the time of the House. The Chair would like to get everyone in with a new question.

UPPER CLYDE SHIPBUILDERS LIMITED

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): With permission, Mr. Speaker, I should like to make a statement about shipbuilding on the Clyde.
Yarrow (Shipbuilders) Ltd. is a subsidiary of Upper Clyde Shipbuilders Ltd. —U.C.S.—in that the latter holds 51 per cent. of the former's share capital. It has long been the intention of the parties concerned to bring about the separation of Yarrow (Shipbuilders) from U.C.S. and arrangements now made enable this to be done. The 51 per cent. shareholding in Yarrow (Shipbuilders) owned by


U.C.S. is now being acquired by Yarrow & Company Limited, which thus becomes the 100 per cent. shareholder. In this way Yarrow (Shipbuilders) becomes independent of U.C.S.
Yarrow (Shipbuilders) is predominantly a naval yard with a long tradition of building excellent warships for the Royal Navy and overseas governments. Both Yarrow (Shipbuilders) and U.C.S. have encountered difficulties in recent years and both face problems of serious cash deficiency. In view of the importance of Yarrow (Shipbuilders) for the present orders and future programme of the Royal Navy, it has been decided that the Ministry of Defence should make a loan to Yarrow (Shipbuilders), on terms to be agreed, towards meeting the company's requirements for working capital. These are at present estimated at a maximum of about £4½ million during the next three years. This facility should enable Yarrow (Shipbuilders) to maintain its programme and to regain profitability.
U.C.S. is strengthening its own financial position further with the help of shipowners for whom it is building, and it is confident of its ability to achieve a viable future. It is proposing a capital reconstruction to reflect the realities of its balance sheet. Precise details remain to be worked out, but the intention is that the Government for their part would agree to a substantial writing down of equity and a writing down and conversion of fixed interest public loans into a smaller equity holding. The aim would be to maintain a total public holding of some 48 per cent. of the U.C.S. voting equity but with an increased dividend entitlement after the capital reconstruction. No new public funds are to be provided to U.C.S.
A Supplementary Estimate will be submitted to the House in due course.

Mr. Bean: May I, on behalf of my right hon. and hon. Friends and myself, warmly welcome the statement the Secretary of State has made, which indicates that the Government are prepared to make substantial sums of public money available for shipbuilding and retain a 48 per cent. public shareholding, which confirms the policy of the previous Government; and the fact that no money is to

be given to U.C.S. is a confirmation that U.C.S. is now viable?
We shall, as the Secretary of State will understand, want to debate this matter and the state of the shipbuilding industry generally, because, with the best will in the world, there is now no relationship whatsoever between what the right hon. Gentleman says and the industrial policy followed by the Government in these matters, as will be evident not only from this statement but from the Government's proposals to nationalise Rolls-Royce. The right hon. Gentleman is presiding over the total shambles of an industrial policy.

Mr. Davies: It is difficult to detect a question in the right hon. Gentleman's statement, but, giving him the benefit of the doubt, to the degree that this action is concerned with trying to assure the defence capability of this country, I certainly hope that it does meet the wishes of both sides of the House. This is the purpose we are undertaking.

Mr. Boyd-Carpenter: In view of past experience with such loans, what security is being obtained for the loan to Yarrow (Shipbuilders)?

Mr. Davies: As I said in my statement, the terms and conditions of this loan have not yet been worked out and these will have to be seen at the time when they are worked out.

Mr. Rankin: On behalf of Govan and Govan Shipbuilding Yard, I welcome the statement. Not only will it help Yarrow, it will also help the Govan yard. May I suggest to the Minister that he continue the policy a little further, because we also have another component in U.C.S. which could do with a little aid. Would he have a look across the water again, where he will see that a little financial help to Clydebank, by separating the engineering side from the shipbuilding side, which is weak and needs aid, would still further assist U.C.S?

Mr. Davies: U.C.S. has not asked me for cash support. Therefore, the hon. Gentleman's suggestion that there should be further cash support would not be correct. In looking at their future, U.C.S. will undoubtedly be examining the means by which the optimum viability would be


maintained. This would entail scrutiny of the questions which the hon. Gentleman has raised.

Mr. Ramsden: What is the statutory or other authority for this loan? Is it under the Shipbuilding Industry Act or what? Second, what will be the future position of other such firms who may wish to tender for construction orders to the Ministry of Defence if one of their number is in receipt of a loan from that Ministry?

Mr. Davies: The second question must be raised with the Minister of State for Defence, because procurement problems of the Royal Navy are squarely in his hands. The last part of my statement said that we would be putting a Supple. mentary Estimate to the House in due course.

Mr. Ross: Does the Government share the view of U.C.S. directors, who are confident that they will achieve viability? The Minister stated that at present they estimate that Yarrows will require £4½ million over the next three years as working capital. If it is agreed, will the Government provide it, and will the right hon. Gentleman arrange for a ceremonial burning of his "lame duck" speech?

Mr. Davies: On the last point, no, I do not think so. The very experience that we are going through intensifies and underlines the problems I raised. On the question of the likelihood that U.C.S. will prove viable in the future, this is the view of the Board. I have no view on the subject at all. If I were to have a view about the viability of every company in this country I should indeed be perplexed. On the total sum made available, this is subject to further negotiation, but it is unlikely greatly to differ from the figure I mentioned.

Mr. Tom Boardman: To avoid any misunderstanding in the future, will my right hon. Friend give an assurance that it is not the Government's intention to under-write future commitments of these yards either to suppliers or to customers?

Mr. Davies: The Government's policy on shipbuilding generally will be debated in the House on a later occasion. The Government's clear purpose, as I have repeatedly said, is not to bail out concerns which cannot see their way through

to viability. That is a policy to which I absolutely adhere. In both these cases the concerns maintain that viability is open to them and will be achieved.

Mr. Benn: Surely the right hon. Gentleman cannot escape responsibility altogether. As Secretary of State, he is a 48 per cent. shareholder of Upper Clyde Shipbuilders. He said that the Board believe that there is a viable future, and he has approved a reconstruction on that basis. Surely the truth is that Upper Clyde Shipbuilders was not a lame duck. If it is, it is a lame duck proposing to lay a golden egg.

Mr. Davies: That is a most extraordinary statement. I have not yet approved a reconstruction operation. I have said that reconstruction is likely to take place but is subject to finalisation. When it comes to responsibility, I am almost bereft of speech by the right hon. Gentleman. Twenty million pounds have been put into this concern and to a very large degree have been lost. They were put in by the party opposite without due regard for the real viability of this concern.

Mr. Speaker: Order. We cannot debate this matter now.

Dame Irene Ward: On a point of order. May I ask your indulgence, Mr. Speaker? None of my hon. Friends who have been called are shipbuilders. With great respect, it is rather hard on the Tyne and other rivers if we cannot have anything said about all the money that goes to Scotland, when nothing comes to us.

Mr. Speaker: I am very sorry. I will certainly bear in mind what the hon. Lady has said when we come to the debate on shipbuilding.

Dame Irene Ward: No, I want it now.

Mr. Speaker: The Prime Minister——

Dame Irene Ward: On a point of order. How can I register——

Mr. Harold Wilson: On the same point of order. If the hon. Lady——

Dame Irene Ward: Sit down. How can I register my opposition to the treatment of the Tyne? I want to say something about the Tyne now.

Mr. Harold Wilson: Further to that point of order, and waiving our rights, surely if the hon. Lady wants it now, should not she have it? [Laughter.]

Mr. Speaker: It is a very bad precedent, but I will call the hon. Lady.

Dame Irene Ward: Thank you very much, Mr. Speaker.

Hon. Members: No. Thank Harold.

Dame Irene Ward: I have not very much to thank Harold for.

Mrs. Renée Short: Silly old woman.

Dame Irene Ward: You be quiet. I am grateful to the House for showing a measure of justice. As the Clyde has done very well out of public funds, I want to know what my Government intend to do about Tyneside? May we have a special debate on the position of the Tyne, if Scotland is to have everything?

Mr. Davies: The question of a special debate on a specific part of the country is not for me but for my right hon. Friend the Leader of the House.

Dame Irene Ward: Then, let me have the Leader of the House.

Mr. Davies: As I mentioned, we shall have an opportunity later for a debate on shipbuilding.

Mr. Barnett: On a point of order. Are we now to take it that every time an hon. Member makes a sufficient idiot of himself he will be called?

Mr. Speaker: In the very special circumstances, and in view of the intervention of the Leader of the Opposition, I called the hon. Lady. I said that it was a bad precedent, and I promise that I will not follow it.

BUSINESS OF THE HOUSE

Ordered,
That if the Rolls-Royce (Purchase) Bill be committed to a Committee of the whole House, further proceedings on the Bill shall stand postponed and that as soon as the Proceedings on any Resolution come to by the House on Rolls-Royce (Purchase) [Money] have been concluded, this House will immediately resolve itself into a Committee on the Bill.—[Mr. B. Weatherill.]

Orders of the Day — ROLLS-ROYCE (PURCHASE) BILL

Order for Second Reading read.

4.30 p.m.

The Minister of Aviation Supply (Mr. Frederick Corfield): I beg to move, That the Bill be now read a Second time.
While I am anxious not to take up too much of the time available to the House, it may be useful if I try to summarise from the start the background to the events which have led to the necessity for this Bill.
In April, 1968, the right hon. Member for Bristol, South-East (Mr. Benn) announced the then Government's decision in principle, subject to a satisfactory contract, to provide launching aid for the Rolls-Royce RB211 engine which had been adopted by the Lockheed Corporation for its Tristar jet civil aircraft. After negotiation of the launching aid contract, the right hon. Gentleman announced in October, 1969 that the aid amounted to £47 million, which was 70 per cent. of the estimated £65 million launching cost at that time.
Last year, after an investigation of the Rolls-Royce Company by the I.R.C., there was a loan of £10 million, and some changes were made on the company's management, including the appointment to the Board of Mr. Morrow and Lord Beeching and the creation of a new post of financial controller.
In the late summer of last year, the Government heard from Rolls-Royce of a substantial increase to £135 million in the estimated launching cost of the work on the RB211, and there were also very substantial anticipated losses on production engines. As the House will recall, this situation led the company to ask for an additional £60 million. The Government then decided, after earnest consideration, to help meet the increased cost by providing a further £42 million in launching aid as part of a joint operation in which the banks were to contribute a further £18 million, the production of this extra aid being expressly made conditional upon a further check of the figures by independent accountants.


As I said in the House on 11th November,
On the question of an independent accountant, I took the view, which I sensed to be the view of the House, that the magnitude of these figures was such that it was right that they should be checked and it was right that any Government support should be subject to that check."—[OFFICIAL REPORT, 11th November, 1970; Vol. 806, c. 406.]
There were also some further changes in the company's management, including the appointment of Lord Cole as chair man.
However, before the accountants' investigations were completed, Lord Cole told my Department on 22nd of last month that he thought that the RB211 development and production programme could not be met. On 26th January, the Rolls-Royce board decided that, subject to consultations with Lockheed and the Government, the company should not continue with the project.
The losses already incurred and those likely to arise on termination of the company's work would, the board later concluded, exceed the company's assets. Therefore, on 4th February, it decided to ask the trustees of the debenture holders to appoint a receiver. This, I repeat, was the decision of the Rolls-Royce Board, though it is only fair to say that, in the light of its position in regard to Section 332 of the Companies Act, I do not see that it had any alternative.
As I said in my announcement that day, the Government then decided to acquire those assets of the company essential for maintaining continuity in Rolls-Royce's work for our defence programme, for our international collaborative programmes, for other countries' air forces, for civil air lines and for other operators throughout the world. The Bill before the House is designed to authorise the acquisition of such assets and their operation by a publicly-owned company.
Since that announcement, my colleagues and I have been in constant touch with the receiver, Mr. Nicholson, and my Department is making arrangements with him for maintaining or resuming Rolls-Royce's work on British defence programme contracts, including those for international collaborative projects.
The receiver for the Rolls-Royce debenture holders has notified me that he has

now decided not to continue the company's contracts with the Lockheed Air craft Corporation for the supply of RB211 engines. To enable Lockheed to consider, in consultation with the United States Government, whether it wishes to negotiate a new contract which would be carried out by the new Government-owned Rolls-Royce company, Her Majesty's Government will indemnify the receiver against expenses reasonably in curred during a period of up to four weeks from 5th February, 1971, in carrying on such RB211 work as the Government may decide is necessary to keep open the option to continue the programme. We have also kept informed the other Governments who participate in collaborative projects for which Rolls-Royce is doing work, to explain our intention of ensuring continuity of operation.
We now need the authority of Parliament——

Mr. Anthony Wedgwood Benn (Bristol. South-East): We are extremely grateful for that statement. Will the four weeks period of support that the Government are making available to the Receiver to carry on with the work on the engine allow it to continue at the pace necessary to overcome its difficulties and continue as if it were going into the Lockheed aircraft?

Mr. Corfield: Our intention is that it a satisfactory contract should be concluded no time will have been lost in executing the order.
We now need the authority of Parliament for the acquisition of the appropriate Rolls-Royce assets and their transfer to a publicly-owned company. The company will carry out work for the defence and civil aviation requirements that I specified on 4th February. The Bill does not attempt to define these, because it would be impossible, without a long period of close study, to determine exactly what we would need and to cover them expressly in suitable terms for a Bill, with he necessity of neither omitting anything significant and essential nor embracing anything not essential.
I am sure that the House will appreciate that, since the principal object of the exercise is to restore confidence in continued supply and maintenance, speed


is of the essence of the operation. The very general scope of the Bill in this respect is accordingly necessary to permit us to define, when we can, the particular assets to be acquired. But they will be selected only from among what Rolls-Royce already owns.
It has already been suggested on the one hand that the Government should acquire all the assets of Rolls-Royce Ltd. and on the other hand that, if the assets are needed to serve some customers, including Governments and air lines, we could safely rely upon private industry to come forward to the receiver with a bid for them.
We have rejected both those courses of action. The first we rule out on the ground that the Government should not intervene when private enterprise can meet the market. In the case of those assets not covered in my statement, there is no reason for attempting to make them publicly-owned.
The second suggestion, unconditional immediate reliance on the private sector, is simply the converse of the first. I suppose that it would be attractive if it were satisfactory. But could we really be sure that a bidder would come forward at once, bearing in mind that speed is essential in this matter, for all the assets needed to help complete work essential to our own and other countries' defence programmes?
Here, Rolls-Royce plays a central and crucial part in meeting the Air Force's requirements and a not dissimilar rôle in meeting substantial parts of the Royal Navy's, not to mention the whole of the power plants for B.E.A. If we could not be sure of those, the course suggested would have meant leaving the receiver in doubt, to negotiate with anyone who offered as a bidder, and under a duty to save expense by stopping work where none was in prospect and perhaps dispersing some of the relevant assets.
We must, of course, recognise also the dependence of the Anglo-French Jaguar, the Phantom aircraft, the Harrier aircraft and many others on Rolls-Royce development, production, repair and servicing facilities. We should almost certainly have found that many of the aircraft were delayed in production or grounded by absence of essential maintenance facilities, and that the work of development,

production and maintenance became significantly more expensive. In addition, there would have been large increases in overseas purchases with a continuing drain on our balance of payments and a formidable problem of securing approval for new quality assurance schemes.
All this would be in relation only to our own defence programme. But other Governments have air force requirements of which Rolls-Royce is, in some cases, an almost equally essential supplier. A serious disturbance of the engine work for these projects would necessarily have followed from a receivership at Rolls-Royce, if there were no Government arrangements for assuring as continuous working as possible. In that event the overseas governments in question might well have felt justified in turning elsewhere to help meet their essential requirements, and such a course of non-intervention could, I believe, only increase the damage that has already been done to the name of Rolls-Royce.

Mr. Jeremy Thorpe (Devon, North): The House accepts, of course, the need for speed and that no other form of Bill could have been published at this stage. But surely the receiver is still left very much in doubt which sections the Government intend and do not intend to take over? Could the right hon. Gentleman let us know by what means the House will be informed, whether it will be by Statutory Instrument setting out which sections it is intended to take over, and will that be subject to debate? Can he say what will be the basis of the take-over compensation, will that be in the Statutory Instrument and subject to debate, or are we asked to give a blank cheque?

Mr. Corfield: Clearly, concurrently we are studying carefully the various assets. I expect—and it is right I should be frank with the House—that the major assets to be acquired will become fairly obvious fairly quickly; but there may well be others on which it will not be possible to take a final decision at a very early date. But I can assure the House that I will inform it at any rate ultimately, or, if the House desires, at various stages, exactly what is proposed. Perhaps I should leave the question of price, to which I shall come later. We believe, on the other hand, that the


course of action we propose has every chance of enabling us to restore the reputation and profitability of these great national assets.

Mr. John Morris (Aberavon): Since the right hon. Gentleman, as I understand it, is leaving the question of projects, could he assist us with regard to the M.R.C.A.? Have there been consultations with our partners? Will there be any change in the contractual arrangements and an increase in price following this arrangement? Could we have a statement fairly soon, since the last one was on 22nd July?

Mr. Corfield: I believe the right hon. Gentleman is wrong on that. I answered a Question on this about three days ago. I am afraid it is much too early to give the kind of detailed information for which he asks. We have, of course, been in close touch with the German Government. The Vice-Chief of the Air Staff visited them, and we have assured them of our desire and ability to continue with this engine.

Mr. Tam Dalyell (West Lothian): Has the Minister had discussions about subcontractors? What has he to say about that?

Mr. Corfield: I must be allowed to get on with my speech if there is to be any chance of the large number of other hon. Members who wish to speak succeeding in doing so. We believe we can expect to achieve an equitable settlement with the receiver; that is to say, one which will represent a fair and reasonable return for his trustees and the Rolls-Royce creditors at large as well as for the Government and the taxpayer; and. of course, I emphasise that it will be a negotiated price, because the Bill does not contain compulsory powers and, if it did, it would be difficult to write into a Bill the way in which we should assess compensation.
That will be the aim, to arrive at a price acceptable to both parties as fair and reasonable by direct negotiations. But, in the event of disagreement, provision will, of course, be made for arbitration, which seems to be the only fair way in which we can handle this matter. The Bill does not of itself seek to limit the

scope of Government purchase of assets, but in practice we shall find ourselves acquiring only those which meet the definition of my statement on 4th February. As I then said, to ensure continuity of those activities of Rolls-Royce which are important to our national defence, to our collaborative projects and to many air forces and civil airlines all over the world, the Government have decided to acquire such assets of the aero-engine and marine and industrial gas turbine engine divisions of the company as may be essential for these purposes.
This will mean that, at least in relation to the legislation now in question, we shall not seek to stand in the way of the Receiver's sale to any acceptable bidder of the assets, which we decide not to acquire. The method we have chosen for securing continuity within the area defined in my statement—namely, a negotiated purchase of assets for transfer to and operation by a publicly-owned company—will readily allow us to seek participation from the private sector when that is appropriate. The new company will have all the normal powers to dispose of its assets, and, of course, the Crown can do so without needing specific authority in the Bill. The company equally will be able to raise working capital on the market, in parallel with other Companies Act companies.
There are also, of course—and to this I attach some considerable importance—possible opportunities of closer integration with European aero-engine concerns. Under certain circumstances, and, of course, subject to the views of our French and other friends abroad, it might, for example, be appropriate to consider some kind of merger in future between Rolls-Royce and S.N.E.C.M.A., a firm virtually owned by the French Government. In that event it would be necessary to consider whether the French Government's holding should not be balanced by some continued participation by Her Majesty's Government. At the same time we do not seek to rule out collaboration with firms in the United States.

Mr. Maurice Edelman (Coventry, North): Would the right hon. Gentleman make an important distinction between European co-operation with European aero-engine companies and integration with those companies into European companies in which the identity of the


British element would be lost? Would he bear in mind that in some of those proposals for integration the idea is simply to "milk" British technology.

Mr. Corfield: I do not think I agree with the hon. Gentleman on that. I believe if we are to make any progress at all in collaborative programmes, using that term in its widest sense, we really have to get away from what I would call the nationalistic "Buggin's turn" theory. [HON. MEMBERS: "0h."] I believe that until we can get really integrated management we shall not get the full advanttages of using the resources and skills of both countries.

Sir Harmar Nicholls (Peterborough): My right hon. Friend gave the impression, perhaps, that he was holding back from allowing acceptance of a private bid became of following his principle of a possible merger with the French company.

Mr. Corfield: I had in mind that if this proves possible it probably would not be sensible to dispose of all the Government shareholding in the new company if that were in the offing. I want to keep that option open. I am sure it is right that we should do so.

Mr. Peter Emery (Honiton): This is a point of some considerable importance: for how long would my right hon. Friend want to keep his option open as far as S.N.E.C.M.A. is concerned in order to do what he wants? If he is going to preclude private bidding for a given period the House ought to know exactly for how long he wants to do it.

Mr. Corfield: My hon. Friend realises that in matters of this sort the British Government, and myself in particular, are not the only parties. My forecast, if that be a safe word to use, is that it will take at least a year to weld the pieces which we do take over into a really efficient unit and to ensure that it really has the capabilities and is restoring its prestige in the way which we all want to see. I just do not believe that one will do that overnight.
If, unhappily, it is not possible to make a new negotiated contract with Lockheed, it is abundantly clear that, for the immediate future, the overheads of what is left will be very substantial, and until they can be sorted out it will be difficult,

I think, to put one's hand on one's heart and say that what remains will be immediately profitable. This will not happen overnight, but——

Mr. Douglas Jay (Battersea, North): rose—

Mr. Corfield: No. I think that there really is a limit. I have given way a great deal.

Mr. Jay: rose——

Hon. Members: Give way.

Mr. Corfield: I have been generous in giving way, and I must now get on.
As to private participation in the new company and the possibilities for closer European integration, perhaps on the lines I have mentioned—there can be no certainty on this—it is my intention to consider matters of that sort as soon as it is appropriate, bearing in mind the factors which I have mentioned. I hope that the House will understand that, while it is not the Government's intention that Rolls-Royce should remain indefinitely in Government ownership, it is, in my view, essential to keep open, at least for the immediate future, the sort of possibilities in relation to Europe to which I have referred.
It follows from the decision to establish a limited liability company that the relationship of the new public organisation to Ministers and to Parliament will be somewhat different from that of an ordinary nationalised corporation. The exact degree of Ministerial and Parliamentary control over the affairs of the company will be determined largely by the provisions of the memorandum and articles of association of the new company. I shall be looking at these carefully in order to achieve, or try to achieve, the right balance between the need for control over public expenditure, on the one hand, and the need to develop a proper commercial approach to the company's trading activities, on the other. The memorandum and articles of association of the new company will be made available in the Library, and so will the annual report and accounts of the company.
I have explained the impossibility of defining for the purposes of the Bill the assets to be acquired from Rolls-Royce and, hence, the price to be paid for them.


I propose to keep the House informed of developments by making a statement on the subject at the appropriate time and by ensuring that sums required in the Estimates for my Department, including any Supplementary Estimates, shall be separately identified, with corresponding arrangements in the Appropriation Accounts. The Select Committee on Expenditure and the Public Accounts Committee will have open to them the Ministry's Estimates and Appropriation Accounts, respectively, for the sums of money relating to the acquisition and the use of the assets in question.
As I said on 4th February, it is most certainly not the Government's intention to take over the relevant parts of Rolls-Royce merely to run down the business by simply retaining work on existing engines until they become obsolete. On the contrary, I am determined that this should be a viable and enterprising undertaking. Without research and new projects, wherever appropriate, there could be no long-term future for the company or for our aero-engine industry, nor do I think that there could be very much prospect of attracting the participation of either the private sector or our European partners.
There will be no one in the House or the country who will not deeply regret the events which have necessitated the Bill. In the circumstances, however, I am confident that it represents the right and, indeed, the only sensible course of action, and I commend it to the House.

Mr. Dalyell: Before the right hon. Gentleman sits down, will he say something about the position of the subcontractors? Does he intend to say nothing whatever?

Mr. Deputy Speaker (Miss Harvie Anderson): The Question is——

Mr. Benn: On a point of order, Mr. Deputy Speaker. The House is in some difficulty today. The Minister, quite properly, wants the Bill to go through all its stages today. For our part, we wish to facilitate that, and it is not our intention to delay the proceedings. Indeed, it is my intention formally to move the Amendments which we propose to table after the Second Reading, the debate being taken at this stage. But this means

that, without the usual Committee stage when the Minister would be asked questions, my right hon. and hon. Friends who are concerned about their constituencies and about firms which are faced with difficulty, will be put to a serious sacrifice unless the right hon. Gentleman is prepared almost to have, so to speak, a question time at the end of his speech. I very much hope that he has not finished all that he has to say.

Mr. Corfield: I appreciate the anxieties of hon. Members and their constituents in regard to sub-contractors and redundancies, but, with all due respect, this is not part of the Bill. [HON. MEMBERS: "0h."] My hon. Friend who is to wind up has fully taken on board that there are those matters of concern. It seemed to me right to listen to the concern first and to respond to it afterwards.

Mr. Benn: Further to that point of order, Mr. Deputy Speaker. With great respect, that is not sufficient for the House. [HON. MEMBERS: "Hear, hear."] There are hon. Members on both sides who have been approached by sub-contracting firms and creditors who are now faced with immediate decisions under the same Section of the Companies Act——

Mr. Joel Barnett (Heywood and Roy-ton): This weekend.

Mr. Benn: —to which the right hon. Gentleman referred in relation to the board of Rolls-Royce. The debate today is exceptional in many respects. I very much hope that the right hon. Gentleman—as it were, formally on the basis of, "Before the Minister sits down …"—will allow some hon. Members to put points to him which they would like him to answer, apart from other points which his hon. Friend will deal with in winding up.

Mr. Corfield: If I may make what, I hope, is one final remark, I am sure that the right hon. Gentleman and the House realise that these matters are at the moment the responsibility of the Receiver——

Hon. Members: Disgraceful!

Mr. Corfield: I cannot give any reply—

Mr. Dalyell: Send for the Leader of the House.

Mr. Corfield: I cannot give any reply at the moment——

Mr. Dalyell: The Minister has diddled us.

Mr. Corfield: —but, I have, of course, anticipated that——

Hon. Members: Disgraceful!

Mr. Deputy Speaker: Order. Whatever the feelings of the House may be, it clearly cannot help the debate to take attitudes such as are being taken up at this stage. [HON. MEMBERS: "Why not?"] I have, perhaps erroneously, allowed two points to be put to the Chair which, though expressed as points of order, were no concern of the Chair. The Minister was good enough to reply to them, and I have permitted that.

Mr. Eric S. Heffer (Liverpool, Walton): He said absolutely nothing. Thousands of jobs are at stake.

Mr. Deputy Speaker: I hear what the hon. Gentleman says from a sedentary position, and perhaps he will allow the Chair to take it as a point of order, which it was not. It is for that reason, I should have thought, the wish of the House, the whole House, that the debate should proceed.

Mr. Benn: On a point of order, Mr. Deputy Speaker. My point of order relates to the nature of our proceedings today. The House deliberately provides that the Committee stage of a Bill shall occur after an interval following Second Reading so as to allow hon. Members to hear the Minister's speech and to table Amendments, and this provides, in the normal way, that a Minister is in a position to answer questions put to him.
Under the procedure today, arranged with the good will of both sides—the usual channels reopened today for one day—we have accepted the need to facilitate the Bill in the national interest. The right hon. Gentleman is fair in a purely legal sense when he says that he is presenting only the Second Reading of his Bill. But he knows full well that the viability of the company he proposes to acquire depends upon the viability of component manufacturers which are now faced, literally, in some cases, today or

tomorrow with bankruptcy and the unemployment of their staff.
We are in a genuine difficulty. It could be met if the right hon. Gentleman said, "Before I sit down, I yield to one or two hon. Members." But if he has finished his speech and has nothing to say to the boards of directors and trade unionists up and down the country whose position is totally uncertain, and who will not be helped by the Bill, because we do not know what price he will pay for Rolls-Royce, then, quite candidly, the proceedings today are an absolute nonsense.
I do not know whether you can help us in some way, Mr. Deputy Speaker. We are genuinely anxious to help the Government, but there must be some response, which there has not so far been.

Sir Harmar Nicholls: Further to that point of order, Mr. Deputy Speaker. Would it help to meet the legitimate point being put to the House if the Minister responsible undertook to obtain the leave of the House to reply to the debate, and then we should have an authoritative reply to the points raised from the Minister responsible?

Mr. Thorpe: Further to that point of order, Mr. Deputy Speaker, and in support of what the right hon. Member for Bristol, South-East (Mr. Benn) said, we are in great difficulty. The Minister is commending a Bill to the House, and in a Second Reading speech has quite properly outlined the general principles involved. That is the traditional formula for the introduction of a Bill. But unless we can know the likely impact of the Bill we do not know whether this is an honourable salvage operation or a very shabby legal stripping device to enable the Government to take what they want and to let many other firms go bankrupt in consequence. If it is the latter, the opposition to the Bill will be very considerable. But if it is an honourable holding operation and the Government can try to help us by telling us the position of the sub-contractors, 112 of whom are very seriously affected, but, as I see it, can get no priority in ranking as creditors—they are in exactly the same position as Lockheed, being all ordinary creditors—then we may well want to look again at the whole ethics behind the Bill.


For that reason, I hope that at the inception of the debate on Second Reading the Minister will be able to respond to the entreaties and try to help the House on this matter.

Mr. Deputy Speaker: Order. I know the concern of the House on this matter, but the House will also consider the difficulty of the Chair. Clearly, the Chair cannot know what may have happened between the usual channels. It is obvious that the debate which will follow at this stage will give full opportunity to debate the points. I should have thought it reasonable that on the wind-up which a Minister must conduct there will be replies to the satisfaction or dissatisfaction of those who raise points. This is quite usual procedure. Although I greatly appreciate the concern, I very much hope that the House will now feel that it is competent to have the Second Reading debate, when those points can be put.

Mr. Benn: Further to the point of order, Mr. Deputy Speaker. I am sorry to pursue this matter, but this is not an ordinary Bill. The Minister's mistake was that he presented it as just a Bill to acquire some assets, and presented it in the ordinary way. The truth is that it is being debated against a background of acute anxiety. Many boards of directors are now asking themselves the same question: "Can we continue to trade legitimately under Section 332 of the Companies Act?" This is not just a matter of putting a question in debate and a Parliamentary Secretary, however good. giving a reply. The truth is that something must be said by the Minister today with the authority of the Minister, which can be reported in the Press to the boards of the companies involved, giving them some indication of the receiver's attitude towards the liabilities which Rolls-Royce owes them, so that they can decide whether to go on.
The Leader of the House has entered the Chamber. No doubt he has had whispered to him what the difficulty is. It is that many of my hon. Friends and many right hon. and hon. Members opposite have come to the debate having had representations made to them by firms affected by the collapse of Rolls-Royce. They wish to put points to the Minister, and the Minister has not felt able to give answers to meet the legal difficulties

arising from the collapse. Perhaps it would be possible to adjourn the debate for half an hour to consider the position. We are ready to facilitate the Bill, but we cannot facilitate it if it means that we fail in our responsibility as Members of Parliament to see that our constituents' interests are properly cared for.

Mr. Tom Boardman (Leicester, South-West): Further to that point of order, Mr. Deputy Speaker. There is equal concern on this side of the House for the position of the firms involved but the problem is that my right hon. Friend cannot deal in the Bill with the point of so much concern. The Bill does go part of the way. It goes to the extent of providing immediate action to enable the continuation of those parts of the business that it is in the interests of these small firms to be continued.

Hon. Members: And major firms.

Mr. Boardman: I have been speaking today to small firms that can now continue with their orders because of the decision to introduce the Bill. But for the Bill they would not have been able to do so. The Bill does not meet the point raised by hon. Members about the past liabilities and the grave concern about them. Surely, the starting point must be to get the Bill through—[HON. MEMBERS: "No."]—to give the Receiver the authority to negotiate with someone who can continue those parts of the business. Then I hope that we shall very quickly hear from my right hon. Friend what can be done on the other very urgent problem. But we cannot ask him today to distinguish between the many cases which cause us great concern and the other cases where there may be less reason for the Government to be generous or to make ex gratia payments. Therefore, I believe——

Hon. Members: Speech.

Mr. Boardman: I am on the same point of order. Whilst sharing to the full the feelings that have been expressed by hon. Members opposite, I believe that the best way to respond to them is to support the Bill.

Mr. Jay: Before the right hon. Gentleman sits down—if that puts me in order—is it not obvious that the Prime Minister should be present at this debate?

Mr. Deputy Speaker: Order. That is not a point of order.

Mr. John Morris: On a point of order, Mr. Deputy Speaker. Will you allow the right hon. Gentleman to assist the House to get out of this difficulty by saying whether he has completed his speech?

Mr. Deputy Speaker: Order. I think that it must be plain to the whole House that the Minister had completed his speech. I do not think that it serves the purpose of the Bill, those concerned with it, or the House not to get on with the Second Reading, which is why we are here this afternoon. I ask the House to accept the situation and to agree that I should call the next speaker in the debate.

Hon. Members: No.

Mr. Thorpe: On a point of order, Mr. Deputy Speaker. If my recollection is correct, when the Minister for Aviation Supply was in a seated position—I use that term in a neutral sense—you called the hon. Member for West Lothian (Mr. Dalyell). I did not believe that the hon. Member for West Lothian was being called to make the Front Bench speech for the Opposition. I therefore deduced that you were calling him to put a Question to the Minister, from which I inferred that it was your view at the time that the Minister had not resumed his seat at the conclusion of his speech but was either having a breather or was prepared to give way. I say quite sincerely that I am certain that the Minister wants to help the House out of its difficulty if he can. Would he now be prepared to answer the question put to him by the hon. Member for West Lothian and possibly answer further questions which may be put to him?

Mr. Corfield: Of course I want to help the House. I am aware of the anxieties but the situation really is quite plain. The moment I knew of the impending collapse of Rolls-Royce I put in hand a study of the problems of the sub-contractors. That, for obvious reasons, could not be carried out very thoroughly before the receiver was appointed. The receiver having been appointed, we have very little locus until we get this Bill.
The second problem, which again I thought the House was fully apprised of,

is that we really do not know what the situation is going to be—and we have only arranged this morning with the receiver to carry on the RB211 programme to keep it going—until we know the future of that programme. With the best will in the world, I could not give any general answer on this subject today, but I anticipated people's anxieties and, indeed, had hoped that I would get suggestions to take away and consider, because this is a very difficult problem. That is what I promise to do.

Mr. Barnett: Further to that point of order, Mr. Speaker. There is a way in which the hon. Gentleman can help. He has told us that he felt that Rolls-Royce was obliged, under Section 332 of the Companies Act, to call in the Receiver. The firm had at the time some £200 million net assets. By the same standard, the sub-contractors, though with very much less, will in the doubt in which they are now left almost certainly have to do the same thing. He has not told us—and this is where we are in a difficulty—what sort of price he is likely to pay. I appreciate that he cannot specify it under the terms of the Bill, but it would considerably help the sub-contractors to be able to say that under Section 332 they are not carrying on trading with intent to defraud if he could tell them that he was planning to buy not at break-up prices but at going-concern prices. If he could say that, it would help a lot of sub-contractors out of difficulty.

Mr. Corfield: I am sure that the hon. Gentleman realises that one's power to give judgments on Acts of Parliament are limited. My right hon. and learned Friend the Attorney-General is, unfortunately, sick, but I will ask my hon. and learned Friend the Solicitor-General what are his views on the general subject. The total assets available depend enormously on whether or not there are claims by Lockheed. This is one of the reasons why it is so important to negotiate with Lockheed, which I am trying to put in hand as soon as I can.

Mr. Benn: Further to that point of order. The Leader of the House has come into the Chamber. May I ask him, through you, Mr. Deputy Speaker, whether he can help? There is no difference between the two sides of the House on this. Hon. Members on both


sides are equally concerned on behalf of the firms and people in our constituencies. What the Minister of Aviation Supply has just said is moving towards something rather more helpful. The position of the firms and their boards of directors is conditioned in their minds by the Companies Act and its provisions. I appreciate that the hon. Gentleman cannot know what the Government will do with a company until he knows whether the RB211 will go on, because that affects the position of sub-contractors. But if he could give an assurance that the Solicitor-General will intervene in the debate and say something, it would help our constituents if they could read an authoritative statement. I know that it is a difficult thing to ask him to do because, candidly, it may be not only the Law Officers but the Treasury who will be concerned in ensuring that no apparent assurance is given about the acquisition price that in the event may not turn out to be what happens.
Something must be done, and it would help if the Leader of the House could tell us that at the end of the debate, in addition to the speech by the Parliamentary Secretary, to which we look forward, we shall hear the Solicitor-General. [HON. MEMBERS: "It should be earlier."] Very well then, as soon as possible during the debate, may we have a statement by the Solicitor-General with the support and approval of the Treasury? This would go a long way to helping us.

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Further to that point of order, Mr. Deputy Speaker. Naturally, I am most anxious to help the House in what I recognise to be an extremely difficult problem. As the right hon. Gentleman will appreciate, matters concerning receivers are very complicated legal matters and it is right that the advice of the Law Officers of the Crown should be sought and should be available to the House. I accept that point. It is also very important that my hon. and learned Friend the Solicitor-General should have a chance to consult and ensure that the advice he gives is absolutely accurate and correct in law. He will do that as quickly as he can.
I regret, as my hon. and learned Friend does, that my right hon. and learned

Friend the Attorney-General is, unfortunately, ill, for otherwise he would certainly have been here today. But I undertake that the Solicitor-General will come to the House and make a statement setting out the legal position during the course of the debate, and he will do so as soon as he can. But it would be wrong for me to give an assurance as to the point of time at which he will do so, because the House will wish to have the answer correct in law after proper consideration.

Mr. Cranky Onslow (Woking): Further to that point of order, Mr. Deputy Speaker. It might be acceptable to the House if it were made possible for my hon. and learned Friend to give us this very necessary advice on the question, "That the Clause stand part of the Bill", because otherwise we are going to be in the greatest possible difficulty, since many hon. Members are going to be denying themselves the opportunity of putting all the points we are so anxious to make.

Mr. Deputy Speaker: I think that the House has now had an assurance. The case has been well put from both sides. An assurance has been given that the best possible advice will be made available to the House during the debate. I now ask that we proceed with the Second Reading debate.

Mr. Dalyell: On a point of order, Mr. Deputy Speaker. The implication of your Ruling—and I do not bear any grudge—was that in raising this issue I was being fractious. I agree with the Leader of the House that, of course, these are extremely complex issues, but many of us have to go to our constituencies where sub-contractors are owed millions of dollars, and we have to go to Americans, who are not nationals of this country, and attempt to explain what British law is. That is why we did it.

Mr. Whitelaw: Further to that point of order, Mr. Deputy Speaker. I absolutely accept what the hon. Member for West Lothian (Mr. Dalyell) is saying. That is why I am most anxious to ensure that my hon. and learned Friend, when he makes his statement, gives an authoritative statement of the law. That is what is required, and that is what he will do. It is what I am seeking to get him to do.


I hope that the House will give him the chance to get proper consideration before doing it.

Dr. John Gilbert (Dudley): On a point of order, Mr. Deputy Speaker. I am grateful to you for being so liberal in allowing us to put points of order. This is more than a legal question. The Minister said that there would be a fair and reasonable return for Rolls-Royce creditors——

Mr. Corfield: The hon. Gentleman is putting words in my mouth. That part of my speech was addressed entirely to price.

Dr. Gilbert: —the price would produce fair and reasonable terms. He will not know what the full amount owing to the unsecured creditors is until all the law suits consequent upon this re-organisation have sorted themselves out.

Mr. John Hall (Wycombe): On a point of order——

Dr. Gilbert: I have not finished.

Mr. Deputy Speaker: Order. The Chair can take only one point of order at a time.

Dr. Gilbert: My point is that if the Government do not keep these sub-contractors alive, the whole point of the Bill is totally vitiated. Can the Minister give, just as an order of magnitude, what return in the pound there will be? [Interruption.] Will it be 5s. or 15s., for example?

Mr. Deputy Speaker: Order. That is not a point of order for the Chair.

5.20 p.m.

Mr. William Rodgers (Stockton-on-Tees): In the exchanges which have taken place the failings in the speech of the Minister have been narrowed too much. His shortcoming was not that he failed to discuss matters raised by my hon. Friends concerning the sub-contractors, or failed to discuss what was meant by a fair and reasonable price; it was that he wholly failed to discuss the background to this Bill and to give us any further information in addition to that provided on Monday. This is a Second Reading, and we shall be proceeding in due course to detailed consideration. The House has a right to know a great deal

more this afternoon from the right hon. Gentleman about the prospective negotiations with Lockheed and how he sees the future of the RB211.
The plain fact is that we are being asked today for a blank cheque, to pay an unknown amount at an unspecified time in conditions of almost total obscurity. I say now that unless we obtain a great deal more information during the debate—and we need more than the presence of the Solicitor-General to ensure that—we shall certainly move for a Select Committee to inquire into the handling of the whole affair. We have been very tolerant over the problems in which the Government find themselves. We are deeply concerned for the future of Rolls-Royce. We feel greatly for those whose jobs are in danger and for the future of British technology.
To that extent, although we have not been convinced that the Government had made their case, we were willing to facilitate the passage of this Bill. But it would be a neglect of our duty as an Opposition to allow the passage of this Bill without a great deal more of the information which has so far been denied us. I will do all that I can to ensure that the debate takes such a form and time as to enable the House to know what it has so far been denied.
There are alternative explanations for the position with which we are faced. Either the Government made their decisions in ignorance and did not know any more than we do, or they made their decisions on the basis of information which they are now concealing from the House. The Government can choose. If it is the first, they are condemned for a botched-up job; if it is the second, they have a duty to the House and the country to put before us today the information which we do not at present have.
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) asked for a White Paper on Monday. It was reasonable for us to expect that a White Paper might have been forthcoming. We were forbearing. We recognised the problems with which the right hon. Gentleman has been faced. It has been a tiring and exhausting time, and we have some understanding of his rý;le.
In those circumstances, if there was to be no White Paper, at least we should


have had a full explanation of the position as it now stands. We are in total ignorance of the course of events since Monday and the negotiating position in which the right hon. Gentleman finds himself.

Mr. Corfield: I am sure that the hon. Gentleman appreciates that the mere fact that we are trying to negotiate means that we do not want to give certain matters maximum publicity.

Mr. Rodgers: We fully understand that, and had the right hon. Gentleman made the speech which we anticipated he would have made, I would have been prepared to say that we did not wish unreasonably to press him on matters which affected his negotiations with Lockheed. But we are in total ignorance not only of detailed matters such as those raised by my hon. Friend the Member for Dudley (Dr. Gilbert) but of the whole present stance of the Government.
On Monday the right hon. Gentleman gave the impression, not only to hon. Members on this side of the House but to the whole House and to the country, that he had no interest in saving the RB211. This was the impression he gave on Monday whether or not it was his intention. Since that time we have been led to believe by what he has said, in public and in private, that this is not his view, that he genuinely wishes to see the RB211 saved. Which is the case?
Surely the right hon. Gentleman should have taken the opportunity this afternoon to put the record perfectly straight and to make it clear whether the Government hope to save the engine or whether they would prefer to see it go under. There are, of course, issues here which are common to both sides. We recognise that there is a grave danger in being wise after the event with the RB211 contract. The plain fact is that at the time the House rejoiced that it had been achieved, and this was the view not only among people in the country but in the technical and expert Press too.
It is also common to both sides of the House that Rolls-Royce has been a remarkable company with a fine record of technical achievement and also, by and large, industrial relations. No one rejoices that the company has been brought low,

and that is one reason why it was our intention to facilitate the passage of the Bill, on the understanding that we would be given adequate information on which to judge both the Bill and the Government's position.
It is also common to both sides that Britain must seek to have a future in advanced technology, if necessary together with European partners. These things are, I think, agreed. There are very grave human consequences flowing from this course of events and this is why many of us felt the right hon. Gentleman's speech was inexcusable. The hon. Member for Belfast, East (Mr. McMaster) and my hon. Friend the Member for Derby, South (Mr. Walter Johnson), in their different ways, talked of the grave human consequences of this course of events on Monday. Today the right hon. Gentleman did not talk about these consequences. There was no word of comfort, no word of concern.
Nor did the right hon. Gentleman say anything either about the future of Britain's commercial relations. Everyone is surely agreed that one of the tragedies—and perhaps if we look at today's trade figures we should reflect upon this—is that it is not only the name of Rolls-Royce and least of all the name of the RB211 which is at stake here but the whole future of Britain's commercial relations and her word in international trade. Why did the right hon. Gentleman not have a word to say about this and show that he recognises the problems and shares the concern of everyone else about this grave situation?

Mr. Dalyell: The Government have behaved like a banana republic.

Mr. Rodgers: I turn now to some of the lessons in this. I had hoped that today we would have been able to establish an understanding over a wide area and recognise areas where we could agree to differ. My regret is that the whole mood of the House has changed and the prospect of that measure of agreement and the prospect of showing to the country that we were seriously and fully debating this issue have been lost through the totally inadequate speech of the right hon. Gentleman.
There is, first, the whole problem of the future of the aircraft industry, a point


touched on very briefly by the right hon. Gentleman. There is the question of our co-operation with Europe and our partnership. There is, in addition, the question of the future relationship of Government and taxpayer with the aircraft industry. There must be lessons here for us all. Secondly, there are the problems concerning the management of large technologically-advanced companies. We know, in the broadest terms, that Rolls-Royce has failed because engineers were in charge. But some of us would not want to see accountants in charge either. Somewhere in the middle there must be a solution to this problem, and it has nothing to do with the problems of ownership. It is a question of the organisation and management of large companies.
Thirdly, it is right that we should ask some questions about the rôle of the banks and the City in this matter. I am not saying that I want to pursue it today, and I am not drawing firm conclusions, but I wonder what is the rôle of a merchant bank such as Lazards, which was financial adviser to Rolls-Royce during the whole of the period leading up to November and which spoke for Rolls-Royce in the City. I wonder also what is the position of the joint stock banks, which made large sums of money available, and, surely, should have conducted some inquiry at that stage into the viability of the company.
These are not primarily questions for the House, but I hope that in quiet moments those outside will reflect upon them because I think the nation is entitled to an answer.

Mr. Christopher Tugendhat (Cities of London and Westminster): There are many features of the Rolls-Royce case on which the House will want more information as time goes on, and many of them affect people the hon. Gentleman has mentioned. However, it is only fair to say that the primary responsibility in this matter lay first and foremost with the Government which encouraged Rolls-Royce to enter into the contract and which provided the launching aid. It has become clear as a result of the recent events that nobody knew what was going on in Rolls-Royce partly because the management of Rolls-Royce did not know. The hon. Gentleman should not

cast aspersions on the City until much more is known about the situation.

Mr. Rodgers: If the hon. Gentleman will read carefully what I said—and he may not have noticed that a number of his right hon. and hon. Friends were nodding agreement with my remarks—he will see that I said that this was a matter which the City should look into. I will go no further than that.

Mr. Frank Tomney (Hammersmith, North): The position regarding Lazards and Rolls-Royce is even more acute than the hon. Gentleman realises. Lord Kindersley was on the board of both companies and Chairman of Rolls-Royce through a vital period when the company was losing money from 1961 onwards. These are the sort of points which must be made. The rôle that the City is playing by stock share operations and by adjustment of balance sheets amounting almost to fraud has led to the situation. These things must be inquired into.

Mr. Rodgers: I am trying to keep the record straight and to be totally fair.
There are, fourthly, lessons for Governments and, fifthly, lessons for Parliament.
My right hon. Friend the Member for Bristol, South-East (Mr. Benn), who made a very fair and candid statement on Monday which was listened to with respect and, I think, a large degree of acceptance on both sides of the House, mentioned that when the contract was concluded his Department did not have the facilities to inquire in more detail into Rolls-Royce. No Government Department has had, and no Government Department has today, facilities to examine the position of a large private company in which it chooses, for good reason, to put money.
The plain fact is—and those of us with experience of Government saw this—that when the Government are dealing with industry and civil servants are dealing with businessmen it is a question of gentlemen among the players, amateurs among professionals. I am sure that there is a lesson here that we must endeavour within Government to develop the facilities and acquire the men which enable Government in all its aspects to know more of what it is doing when it decides to spend money in this way. This is a


universal conclusion which deserves further examination.

Mr. Peter Hordern (Horsham): On a point of order, Mr. Deputy Speaker. It would be useful if the hon. Gentleman who intervened just now——

Mr. Deputy Speaker: Order. That is not a point of order. The Chair will rule on that point if and when it thinks it necessary. But I hope that the House will listen to the speeches. Interventions simply make it less likely for many hon. Members who wish to speak to take part in the debate.

Mr. Hordern: I am sure that the House would wish to consider the matter calmly. I thought that the hon. Member for Hammersmith, North (Mr. Tomney) mentioned Lord Kindersley and the word "fraud" together. I hope that I am wrong. If he did, I am sure that he would wish to withdraw in the spirit in which the House is examining the Bill.

Mr. Tomney: I referred to the position of Lord Kindersley and Lazards, the operation of the City in company take-overs, the manipulation of share accounts, adjustments across share bridgings, and so on. I said that the House would have to look into the operation of the merchant banks in particular, which are not fulfilling the function for which they were set up with regard to the commerce of Great Britain on issues affecting the life blood of the industrial nation. I did not directly or indirectly charge Lord Kindersley with fraud.

Mr. Rodgers: We must look at the rôle of Parliament in these matters.
On Monday my right hon. Friend the Member for Bristol, South-East said correctly that neither the RB211 contract in its original form nor, for that matter, the Olympus 593 contract was ideal. We know of the investigations carried out by the Public Accounts Committee from time to time and by the Estimates Committee into the aircraft industry. We know of the rôle of the new Public Expenditure Committee. But I am not satisfied that Parliament yet has enough information about what is happening to money which Governments put into industry.
Some time ago the right hon. Gentleman, when in opposition, pressed for a

relaxation of the confidentiality which is the excuse used by all Governments from time to time to conceal from the House information which they should give it. I was glad on at least one occasion to be able to make information available which the House would otherwise have been denied. I hope that in future all Governments, of whatever party, will believe that they have a duty to this House to give information to it and not to hide behind the excuse of confidentiality on every possible occasion. When the time comes, either through a Select Committee of inquiry or in some other way, I hope that one of the results will be that we shall have a far more open system of Government in all these matters than has generally been the case in the past.
However, we are now faced with a situation in which it is far from clear what the Government want to do and how they intend to go about it. But for the moment I will assume that what the Minister said yesterday in reply to a question from my hon. Friend the Member for Leeds, South (Mr. Merlyn Rees) about whether the RB211 was worth saving-namely, "Yes, I think it is"—stands on record and that we can assume that the Government will seek to renegotiate a contract for the RB211. If so—and the right hon. Gentleman made some remarks to this effect today—this is progress and we are very glad to know that he has in mind that the development of the engine shall proceed through the next four weeks and there shall be no attempt to prejudice the final outcome of the negotiations in this way.
On the best information available to us, it looks as of it should be possible to renegotiate, because those who have been closely concerned with the development of this engine say that an engine somewhat derated but with acceptable thrust can be available within six months, and this would mean that the airlines could be flying with it commercially by May, 1972. They also say that on present evidence there is no reason to believe that the research and development cost need exceed £170 million, the figure so far quoted. Thirdly, they say—and this is precisely the sort of matter which we would have wished to investigate at greater length—that some of the expenditure on research and development of the RB211 could be attributed to the whole family of quieter, new technology engines.


Therefore, if the research goes forward, it would be wrong to attribute it all to the RB211. Some of it can rest upon other engines which we hope that Rolls-Royce will build and sell abroad.
Here I ask a specific question about the figures which we were given on Monday. There was a reference to the unit cost of the engine becoming £460,000. The Chancellor of the Exchequer referred to £170 million as the development cost. I hope that we shall be told today whether any allowance is made in the selling price for development costs, because, if so, we shall be counting the same sums twice over. In other words, if we are allowing for the escalation of development costs in an escalated selling price, the figure is coming in on both occasions. We do not know, we have not been told and we should certainly have this information before the end of the debate.

Mr. Onslow: I share the hon. Gentleman's desire that we should have this information. I will put to him a difficulty which he should appreciate. He will be familiar with the second paragraph of the statement made by the company when it announced that it could not continue trading. Has he evidence to suggest that the Government, the Receiver or the general public should believe any of the consequences which the company summarised as being inevitable in that statement, on the basis of independent checking of what can be ascertained to be fact?

Mr. Rodgers: I agree that there are problems here, and, in the absence of a White Paper and of further information we must rely partly upon what the right hon. Gentleman says, but it is perfectly reasonable for any hon. Member sitting on whatever bench to put together such information as he has and try to draw tentative conclusions. If the hon. Gentleman is saying that we should not do this, he is asking us to give a totally blank cheque and not to fulfil our proper responsibilities.
The right hon. Gentleman will have in his mind some formula, and I hope that he will recall the extent to which we must not aggravate the damage already done to Britain's commercial reputation abroad. I mentioned this earlier, but the right hon. Gentleman has not referred to it. I hope

that either he or one of his hon. or right hon. Friends will say that if Lockheed comes up with a proposition which might, for example, include waiving its claims for delay and contributing in part to the escalation of the engine costs, he will not hold back from making substantial sums available so that a reasonable bargain can be struck. My view—and I put it tentatively because I do not want either to prejudice the negotiations or to draw conclusions in the absence of information—is that it would be reasonable for the Government to bear, say, half the increased cost of the engines and to meet the whole of the development cost, if Lockheed were prepared to meet the difference between the original and the now anticipated cost of the engines and to waive all claims arising from delay. I simply ask for an assurance that the Government are prepared to spend more than the £42 million committed in November if it is necessary to do so to conclude a deal. That is a simple question, and I do not believe that an answer to it will in any way prejudice the negotiations.
I will briefly ask a number of other questions. I say "briefly" because I am anxious that the House should fully debate the issue. The right hon. Gentleman has said that he will keep the House informed of developments. I take it that he will make a statement at each stage and not leave us to rely upon secondhand and newspaper reports of the stages of the negotiation and the decisions of the receiver. I ask him again, pending a decision on a Select Committee, to consider whether a White Paper would help us.
Secondly, I hope that we shall be told today how many sub-contractors are affected. I ask only for the best available figure, because he may not know for certain. is the figure in excess of 2,000, and is the amount of money involved something like £75 million? I hope that the right hon. Gentleman will be able to say that it is not as much as that, but this is a figure which has been talked of widely in the City. I hope that we shall be given more information about the subcontractors and what the Government are prepared to do to help. If the development of the RB211 goes ahead, and if the development of the family of engines goes ahead, it will be necessary to have sub-contractors with the experience and


the experienced labour force to fulfil the requirements so that there shall be no further delay. If the sub-contractors go out of business now and let off their men, they will not be able to respond when it becomes necessary to do so.
Thirdly, I understand that normally under company law the Revenue would have a first claim on the assets, together with other preferred stock holders. If this is so, will the right hon. Gentleman ask his right hon. Friend the Chancellor of the Exchequer to consider waiving the Revenue claims if by so doing he could help those who will bear the worst brunt of the collapse?
Fourthly, will the right hon. Gentleman confirm what is generally understood, that Lockheed in its rôle as a creditor would be on a par with the other creditors, many of whom are in a small way of business? Will he bear in mind that in any negotiations with Lockheed it would be right and just for Lockheed to be urged to waive part of its claim if this would help small men who would otherwise be driven to the wall to get something out of the assets, if there are any to be disposed of?
Fifthly, are there any obligations still outstanding in the area of redundancy payments or pensions, and what claim will they have on the assets? I assume that the pensions of those employed by Rolls-Royce will have been taken care of in a separate pension fund, but we do not know; nor do we know how that pension fund was invested. Many people who have worked at Rolls-Royce will want an assurance on this and an indication of the Government's concern, and practical help should that be necessary.

Mr. F. A. Burden (Gillingham): The hon. Gentleman is asking that a declaration should be made that the pensions are inviolate and not in any way affected by the failure of the company.

Mr. Rodgers: I am not going quite as far as that, but the hon. Gentleman has taken the sense of what I am saying. I am anxious, as I am sure the whole House is, that the people whose lives and livelihoods are tied up with Rolls-Royce will come out of the with some dignity. It is a tragedy that the Government, the House and merchant bankers should make a mistake about Rolls-Royce, but if they

can do so, how much more excuse is there for the ordinary man or woman who in good faith believed that Rolls-Royce could not collapse and are now in a position of acute insecurity.
Sixthly, I ask the right hon. Gentleman to confirm, or to take note of the possibility, that in the event of the failure of negotiations with Lockheed and a subsequent action in the American courts it would be possible for all goods imported into the United States by an heir to Rolls-Royce to be sequestered if Lockheed had a legitimate claim. I have been told—and I ask only for confirmation or denial—that the heir to the present Rolls-Royce company which markets Rolls-Royce cars to the United States might be unable to continue its export business to the United States because Lockheed would have a claim on every export landed there. This is the sort of information the House is entitled to have, and I assume it is within the competence of the Solicitor-General when he appears before us.
I ask one or two simple questions, and I hope I shall not be told that these are matters for the Receiver. First, is it not the duty of the receiver acting on behalf of the debenture holders to sell at the best price to anybody who offers to buy? Are there any provisions in the Bill which remove the legal obligation resting on the Receiver to do precisely that? If there are no obligations in the Bill and the receiver is presented with an offer from the United States or from some other country for the assets of Rolls-Royce, is there anything to prevent the sale of those assets to the United States or any other country?
If the answer is that there is nothing in the Bill to prevent it and the receiver has a legal obligation to sell to the highest bidder, where do the Government stand if somebody bids for Rolls-Royce more than the Government are prepared to pay? The right hon. Gentleman has referred to a "fair and reasonable" price, which he has not defined, but if the receiver believes that the fair and reasonable price offered by Her Majesty's Government is exceeded by a price offered by another manufacturer in another country, is there anything to stop Rolls-Royce falling under foreign ownership? I hope that the right hon. Gentleman will in all these matters have


most in mind the best interests of the country.

Mr. Dalyell: Would my hon. Friend hazard a guess at what is meant by the Government's statement "any acceptable bidder", because the definition of the word "acceptable" is crucial?

Mr. Rodgers: I find that in these circumstances it is impossible to hazard a guess at what the Government mean by much of the language they use, and I would not usurp the function of the hon. Gentleman who is to reply. I hope he will feel it his duty to give an answer to my hon. Friend's legitimate question?
The Bill itself is unique in the experience of many hon. Members who are more knowledgeable of this House than I am. It has a remarkable Financial Memorandum. In the whole of my ministerial career I never managed to persuade the Treasury to accede to a Financial Memorandum of that kind. It is totally open-ended, and if I am to congratulate the right hon. Gentleman on anything, it is in persuading the Treasury to allow him a freedom which others have so often been denied. I am reminded in looking at the Bill of a phrase which was used in different circumstances by Sir Winston Churchill. He once referred to
a riddle, wrapped in a mystery, inside an enigma".
I believe that that would be a fair summary of the Bill set against our experience and the inadequacy of the explanations given this afternoon.
I do not know how much time we shall now have to spend on the Bill. We have a duty of public scrutiny, and I hope that in the public interest that duty will be fully fulfilled today by hon. and right hon. Gentlemen on both sides of the House. When we reach the Committee stage we shall take the view that the Bill is defective in two main respects: first, that it does not involve taking the whole of Rolls-Royce into public ownership, which we believe to be right, nor does it prevent the selling back of parts of Rolls-Royce to private enterprise. These are deplorable shortcomings in the Bill and in due course we shall seek to amend it.
We find ourselves in a thoroughly murky situation. I wonder whether there is not a dereliction of duty on our part

as an Opposition in allowing this Bill to pass, and this is a matter upon which we must reflect. If we allow it to pass, it is not because we believe the Government have made their case. It is out of concern for all those whose lives and livelihoods have been gravely affected by the course of events, and out of concern for the anxiety throughout the world over Britain's commercial standing, that we shall allow the Bill to pass. We have a public duty to enable something to be rescued from a sad, sorry and deplorable situation.

Mr. Dalyell: On a point of order——

Hon. Members: Not again.

Mr. Dalyell: On a procedural point, there is a genuine difficulty on the part of some of us who had hoped to catch your eye, Mr. Deputy Speaker, for brief speeches but who would not wish to do so until they have heard what the Law Officers of the Crown have to say.

Mr. Deputy Speaker: Order. That is not a point of order for the Chair. Mr. Gorst.

Mr. Dalyell: May I ask a quick question? When is it likely the Solicitor-General will be able to give us the benefit of his answers to some of the questions?

Mr. Deputy Speaker: Order. The hon. Gentleman heard the answer, as did the Chair. It is not a point of order for the Chair. Mr. Gorst.

5.57 p.m.

Mr. John Gorst (Hendon, North): I very much regret that I should be making my maiden speech on an occasion such as this, arising from the sad and tragic events for the whole of the nation and for the many people whose livelihoods are at stake. I can certainly number many of my constituents among those who are employed by Rolls-Royce.
I feel that it is not inappropriate for an hon. Member from Hendon, North to wish to make a contribution to this debate, since Hendon for a very long time has been the home of one of Britain's earliest airports. Nor is it inappropriate that on this occasion I should be appearing in this House having succeeded in my constituency Sir Ian Orr-Ewing who, on matters of defence, made so many devoted contributions to discussions in this place and elsewhere.


Inevitably, I regret that on this subject—which is not one of my choosing but which, in a sense, chose me—inevitably a measure of controversy must creep into what I have to say. I shall hardly be surprised if hon. Members opposite have difficulty in extending to me the normal indulgence. This matter cannot be considered in isolation. The context in which the Bill is to operate will have repercussions which undoubtedly will rumble down through the ages in various ways.
I wish to make it clear at the outset that I am not against the proposal that the Government should step into Rolls-Royce as temporary trustees. I fully accept the vital military and civil projects which must be kept in being. However, that does not mean I accept that the House should give the Government what has already been referred to as a blank-cheque. It is a cheque which is undated, which has written on it no sum of money, which has nothing on the counterfoil to say to what the payment relates, and, above all, there is nothing to say on what the money is to be spent. No Conservative Government ought indefinitely to allow thmselves to be involved in the supply, manufacture, or indeed the further development, of items which hitherto have been generally accepted on this side of the House as more appropriate for private industry. Nor should any Conservative Government be granted an open-ended, unconditional opportunity to remain in a risk-taking enterprise requiring the discipline and experience of free enterprise commercial judgment.
For these reasons, however long the Government remain in sole control of those parts of Rolls-Royce which it is proposed to acquire, no Government—either this or any future Government—should be allowed to channel any new contracts or projects into this temporary holding company so long as there is no free enterprise element within it.

Mr. W. R. Rees-Davies (Isle of Thanet): Will my hon. Friend allow me?

Hon. Members: This is a maiden speech.

Mr. Rees-Davies: I apologise to my hon. Friend.

Mr. Gorst: If this new Rolls-Royce creation is allowed to undertake new ventures, be they Government contractual work or other self-initiated commercial projects, this must only be done if private capital has already been subscribed to the new company. However minimal this private capital may be, however minimal the private interest in these ventures, they ought to be on the basis of there being a private risk-taking share in them, with, of course, appropriate board representation to match it.
If the Minister is unable to accept a gradual and continual infusion of private capital into the new Rolls-Royce right from the start, I shall find it extremely hard to support the Bill during its later stages.
If the Minister is unable to give an assurance that, if available, private capital will be allowed to be brought into the new company right from the start, then I urge him to revise his plans to sell off this venture at some future undefined date.
I urge the Minister to see that no new ventures, no new contracts, no new undertakings, are permitted or contemplated. I suggest that in due course this Mark II Rolls-Royce Company be run down, wound up, and dissolved as the essential defence and civil aviation requirements make this possible.
If people say that such a course of action will release on to the market vital engineering resources and skilled design teams, I concede that it is quite clear that determined action will have to be taken to ensure that they are absorbed by alternative free enterprise organisations, and it is clear that such firms must be progressively encouraged to bid for a new Government or other commercial ventures which might otherwise have gone to Rolls-Royce.
The State must and should not involve itself in commercial risk-taking. It must not do this, not because the State must not make profits—indeed, it ought to make profits wherever this is humanly possible—but because it is certain to be the first to make losses wherever they are going.
I wonder whoever heard of Paul Getty, Henry Ford or Lord Nuffield exercising their entrepreneurial skills, talents and


judgments from behind a desk in Whitehall. Of course we have never encountered such an occasion; nor are we likely to in the management of Rolls-Royce Mark II.
When the private sector of industry takes big risks, when they fail and those enterprises go to the wall, it is the shareholders who suffer the financial consequences. But when Government enterprises fall down flat on their faces there are no immediate crashes because the taxpayer bears the brunt of the disasters through one public subsidy or another.
If we allow 100 per cent. Government shareholding in this new Rolls-Royce company, if we allow Government agency, using the resources of taxpayers' money, to take on new and possibly risky enterprises, we shall be exchanging the long stop of bankruptcy and liquidation, which we have seen invoked recently, for a stupendous folly over which the impotent taxpayer will have no control.
As I have said, the Government are asking this House to pass a Bill which will be a blank cheque. We are told that no sum of money is or can be written into the Bill. I am perfectly prepared to trust this Government to protect our interests, as taxpayers, on this score.
It is said that no date for the departure of the Government from these activities can be written into the Bill. On this point, I am indeed prepared to trust implicitly the sincerity of those assurances which may be given—namely, that the Government will expedite the sale at the earliest possible moment. But, despite any such assurances which might be given, I am not convinced that we, as taxpayers, are adequately safeguarded for the future.
Last night I had a gigantic, monumental nightmare. The whole Government, including those who are not at the moment on the Front Bench, were run over by a proverbial bus. Our Conservative majority was decimated, and, most disquieting of all, right hon. and hon. Gentlemen opposite had changed places with us and were sitting on this side of the House.
But my nightmare got worse—[An HON. MEMBER: "Impossible!"] The

Pergamon Press had collapsed, and I watched how these new Labour Government Members set about implementing our newly established precedent. In the national interest, they said, they were setting up a public service publishing company. Then a leading daily newspaper went bust. What happened? The newly formed Government rushed into the creation of a new Bill entitled the Daily Mail (Purchase) Bill, and immediately there was created a public service newspaper.
Nor was this all, because my nightmare got even worse. One after another, British Leyland, I.C.I. and Unilever all crashed, too, and there were roars about the public interest. Even a giant insurance company—perhaps it was Lloyds—went bust. Throughout this nightmare there was a constant murmur about the national interest, the job security of workers, and the fulfilment of overseas commitments.
Eventually, I found myself contemplating the ultimate Socialist state in which, to the tune of the Red Flag, I heard perpetual chants of, "This is a Tory Measure, This is a Tory Measure, This is a Purchase Bill".
When I was elected last June, I told my electors, in the words of the Conservative Party manifesto, there has been too much government and there will be less. Time after time I told my electorate, also in the words of our manifesto, that an increasing use of private capital would help to reduce the burden on the taxpayer. I meant what I said then and I mean to stand by what I said now.
As I see it, two options are open to the Government in the present situation. The first is that provision can be made for the infusion of private capital into the Rolls-Royce rescue operation just as soon as such private capital is willing to come forward. This ought to be done at the outset.
The alternative is that the whole of This undertaking which is to be acquired must be run down and wound up and not extended for the purpose of a future sale.
I just do not believe that when the private enterprise Rolls-Royce, which failed to be a commercial success recently, is replaced by a public enterprise


Rolls-Royce, this particular undertaking will fare any better. Indeed, the whole commercial history of this and other countries proves exactly the reverse.

Mr. Raphael Tuck (Watford): On a point of order, Mr. Deputy Speaker. There are many right hon. and hon. Members who want to get in on this debate because they have constituency interests. For example, I have 4,000 workers in the small engine division of Rolls-Royce at Leavesden, Watford, who want me to ask where they stand, whether they will get their wages, and what the future holds for them. At our present rate of progress, it looks as though I shall not get in to the debate. Is it possible to get agreement for right hon. and hon. Members to limit their speeches to 10 minutes at the most?

Mr. Deputy Speaker (Miss Harvie Anderson): I am sure that that is a pious hope shared by the Chair and by all hon. Members present, but perhaps the best way to accomplish it is to allow hon. Members uninterrupted opportunities to speak.

6.11 p.m.

Mr. John Stonehouse (Wednesbury): I am sure that the House has taken note of the request made by my hon. Friend the Member for Watford (Mr. Raphael Tuck) and I, for my part, will do my best to ensure that my contribution does not exceed the stipulated 10 minutes which he has laid down as the rule for the day.
I am sure the House will agree with me when I say that we have listened to the quite extraordinarily interesting maiden speech from the hon. Member for Hendon, North (Mr. Gorst). It is a compliment to the hon. Gentleman that as he proceeded we lost consciousness of the fact that it was a maiden speech, so much so that one of his hon. Friends sought to intervene. That is a rare compliment, and it shows the ability with which the hon. Gentleman can argue his case. Although we do not agree with him, we admire his courage in putting forward his point of view with such force.
The hon. Gentleman paid tribute to his predecessor, Sir Ian Orr-Ewing. I am sure that we all want to endorse what

he said, and wish Sir Ian well in his political retirement, because we remember his contributions to debates in this House.
The hon. Gentleman has come here with a reputation as a fairly seasoned campaigner. Some of us, in other contexts, have learned to appreciate the force of his campaigns, but we are glad to see him in the House now where we can cross swords with him across the Floor of the Chamber, and we look forward to his future contributions to debates, when we can do just that.
We have in the last few days witnessed a tragedy which is of such dimensions that very few of us can realise at this stage the full implications of it. I had the responsibility about three years ago of conducting the negotiations with the Lockheed Aircraft Corporation when I was the Minister of State at the Ministry of Technology. I recall how delicate those negotiations were, and it is with that kind of hind sight that I propose now to make a few observations on the way in which the Government have handled the present state of affairs.
I agree with the Governmental statements that there can be no question that the Government can take on an open-ended commitment in any deal which they have with a private enterprise firm. If they were to do that, it would mean that any loan or assistance given to any company would involve the Government in backing that company's commitments to the absolute limit—and that is virtual nationalisation—whilst allowing the shareholders to continue their share in the business without any risk, and I believe that that would be very wrong.
At the time of the negotiations with the Lockheed Aircraft Corporation there was no question that the Government were entering into an open-ended commitment, but there was an implied undertaking that if Rolls-Royce was unable, from its own limited resources, to see the RB211 contract through—because it was a formal contract—the Government would look extremely sympathetically at providing assistance to see it through.
What has happened is that the Government have not seen the total collapse of Rolls-Royce. The whole purpose of the Bill this afternoon is not to preside


over the funeral of Rolls-Royce, but to ensure that the major part of Rolls-Royce's business continues, because the company will be viable, it has a future, and there is no question of total collapse.
In those circumstances, I believe that it is utterly deplorable and despicable of the Government to pick out one contract among the many which Rolls-Royce negotiated and say that it is only this one foreign contract on which we are not going to fulfil all our commitments. The Minister said this afternoon that the whole purpose of the Bill was to honour international collaborative agreements and to see that our responsibility to foreign civil airlines was fulfilled. He went out of his way to say that. Why, then, make an exception for one major aircraft company and several very important airlines in the United States which were relying on Rolls-Royce's seeing this contract through?

Mr. Norman Tebbit (Epping): The right hon. Gentleman has used the expression "our commitment" on several occasions in relation to this contract. I am sure that that was inadvertent, and that he means the Rolls-Royce Company's commitment, as he has been involving himself rather in his former capacity.

Mr. Stonehouse: I am not in the debate this evening making a legalistic interpretation of the responsibility. What I am saying when I use the word "our" is this country's responsibility to honour a commitment which Rolls-Royce took on, supported by the Government at the time because the Government believed that the Rolls-Royce contract was one which the company could honour and fulfil, following the assurance which the company gave.
The point that I wish to come to is that the commitment which we should go on with, the Lockheed contract, is not an open-ended commitment in the sense that there is no limit to the amount of money that would be expended on it. All the discussions that are going on now, and the discussions in the financial columns of the newspapers, are about money, not about capability, and the Rolls-Royce Company, as everybody accepts, has the technological capability to see its contract through.
It is a question of the price at which this can be done, and I have been fascina-

ted to read in some of the City columns in the last few days some prognostications about the actual price which the Government would have to pay to ensure that a contract to build the RB111 went through. They are far from the figures of £300 million and £400 million which have been bandied about so far. They are substantially less than that.
The Guardian of a few days ago, after a fairly long analysis of the situation. concluded with this paragraph:
Comparing one solution with the other, the saving is not £400 millions but £30 millions to £130 millions plus a deferred £56 millions. The reader can determine whether this is a high or a low price for the possible damage to Britain's commercial reputation. And the creditors, who will lose almost what the State saves, can compose their own comments.
That, I think, is a fair commentary on the situation.
This is not a question of an open-ended commitment but of how much money the Government were prepared to allow Rolls-Royce to have, so that it could see its contract through. I believe that the Government have made a deplorable mistake in allowing Rolls-Royce to collapse in this way.
What would have been the position if the boot had been on the other foot? Suppose that Rolls-Royce had had a marvellous contract, with no technological problems with carbon fibres and suppose that it could produce the engines at a price consistent with its previous negotiations. Suppose, then, that the Lockheed Aircraft Corporation was in trouble, went the way of Penn Central, was allowed to collapse, and the American Administration took over the company to protect essential defence interests—but allowed only the contract with Rolls-Royce and with Britain to collapse. We would be up in arms as a nation complaining about this ignominious behaviour, and that is now the Americans feel about us today.
We have taken a dishonourable course which would not have been worthy of John Bloom in his worst days. I believe that the Government will live to regret this despicable Measure, which they have embraced, not in the interests of saving a great sum of money but in the interests of saving a comparatively paltry sum—less than 10 per cent. of the annual defence budget. But what is the point of having a defence of this nation unless we protect


our essential commercial integrity and future technological opportunities?
This Measure which the Government have perpetrated on the nation is their economic Suez. The effect on the industrial life of the nation will be felt for many years. Every negotiator, private or public, going abroad to negotiate on behalf of Britain in the future, will have the name Rolls-Royce flung in his face. He will be asked, "Can we trust you any more? What is the value of the Government's endorsement of your proposal, when they let down Rolls-Royce on a contract like the 211?" The Government have been condemned for this whole business, and I bitterly regret that they are, apparently, having no second thoughts about their actions.
On the Bill itself, grave misgivings have been expressed already about the position of the sub-contractors. I endorse those fears, because many of my constituents will be directly affected. I hope that the Government will at least be able to say that the sub-contractors will have a certain percentage of their liabilities met. Whatever percentage can be put, I hope that something can be said, so that these companies can continue in business during the next few weeks, when so many important decisions are being made.
I entirely endorse what my hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers) said. There are many lessons to learn from this episode. The one which we have learned is that, where so much public money is involved and it involves a major part of the support of a company, it is right not only in the interests of public accountability but also in the interests of efficient management of the taxpayers' money which is put into this business, that there should be public control, through nationalisation.
I regret that, in those days when we were considering what support we should give Rolls-Royce for various enterprises—not only the 211—we as a Government did not make a decision to nationalise Rolls-Royce so that it could be subjected to full public control. I hope that, when this side returns to that side of the House and the nightmare, or shall we say the dream, of the hon. Member for Hendon, North is realised, we will take steps to ensure that the lessons of the Rolls-Royce

affair are really learned and that we have public accountability and control where public funds and public commitment are involved.

Several Hon. Members: rose——

Mr. Speaker: Order. It is obvious that nearly 30 right hon. and hon. Members want to take part in this debate. I hope that they will keep their speeches as short as possible.

6.25 p.m.

Mr. Robert Adley (Bristol, North-East): Before I comment on the remarks of the three former Ministers who have spoken, I should like to congratulate my hon. Friend the Member for Hendon, North (Mr. Gorst) on what must have been a nerve-racking maiden speech, since he was called after the Front Bench spokesmen in such an emotional and highly charged debate. He performed very well, and I know that I echo the opinion of hon. Members on both sides when I say that we look forward to hearing from him frequently in future.
It is also difficult and perhaps nerve-racking for a new back bencher to have to speak in this debate, certainly someone who was not a Member on 1st April, 1968, and who has to follow three former Ministers. I do not want to start taking up time with a long rhetorical discussion of what has been said, but I believe that the remarks of the right hon. Member for Wednesbury (Mr. Stonehouse) go absolutely to the kernel of the problems which we face. The problem is a direct result of a contract negotiated with the connivance of the last Government, and in which that Government's rôle has never been clearly and fully explained to the firm understanding of all the parties concerned—not only those in this country, but, of course, the parties overseas.

Mr. David Waddington (Nelson and Colne): Has my hon. Friend ever discovered when it was that the Rolls-Royce contract with Lockheed first came into the hands of the right hon. Member for Wednesbury (Mr. Stonehouse), when he was responsible for these matters? Would it not be interesting, in order to find out how much concern they had for the nation's interests when they were in office, to know when that happened?

Mr. Adley: I am grateful to my hon. Friend. If my hon. Friend the Member


for Hastings (Mr. Warren) catches your eye, Mr. Speaker, I hope that he may be able to deal specifically with that important, if not vital, point.
The right hon. Member for Wednesbury used phrases like "implied undertaking" and "sympathetically" to describe the relationship between the last Government and Rolls-Royce, and, presumably, between the two of them and the Lockheed Corporation. This is our problem today; this is why Rolls-Royce are in this position. It is because the contractual relationship between the last Government, Rolls-Royce and Lockheed was never fully and clearly understood. When the right hon. Gentleman said that he did not want to enter into a legalistic argument, I thought that it was a pity that there was not a little more concern to enter into a legalistic contract at the time, so that Lockheed, Rolls-Royce and the Government knew exactly where they stood.
In the last few days, the name of Rolls-Royce has been on everyone's lips. There has been an assumption that perhaps Derby bore the brunt of the troubles which the RB211 could bring upon the Rolls-Royce empire. I have no intention of making a constituency speech, but my constituency of Bristol, and the surrounding area, is more than passingly interested in this situation, because—I make this point with no frivolity—while right hon. and hon. Gentlemen have expressed concern about the sub-contractors, the British Aircraft Corporation's major subcontractor is the Rolls-Royce company itself. I cannot emphasise this point too strongly. This is my reason for speaking in this debate. My constituents want to know why the jobs and the future which they thought were secure last week have now perhaps been put at risk, or certainly in some doubt, because of what has happened at Rolls-Royce.
I am in a delicate position, because I believe that blame attaches to a number of right hon. Gentlemen opposite, and I have no wish to become involved in any slanging match. I think however that, sometimes, the enthusiasm of the right hon. Member for Bristol, South-East (Mr. Benn) might have been better tempered had it been matched with the same attention to detail and real depth of knowledge of the subject which has been shown by the present Minister—my right hon.

Friend the Member for Gloucestershire, South (Mr. Corfield)—in the way in which he has attempted to get out of a very difficult situation.

Mr. Benn: The hon. Gentleman fought the last election on a manifesto signed by other members of his party saying that the Labour Government showed no enthusiasm for the aircraft industry. That was his charge. He and his colleagues repeated it throughout the campaign. Throughout the whole period of the last Parliament Tory Members attacked the Labour Government for failing to support the aircraft industry's projects. In those circumstances, the hon. Gentleman, as a new Member, should consult the record and see that such a charge is totally incompatible with everything that was said during the time we were in office.

Mr. Adley: The right hon. Gentleman might on his next visit to Preston talk to certain people who were involved in the TSR2 project and see what they have to say about the Labour Government's attitude to that project. On his next visit to Filton he might mention the name of the late General de Gaulle who, with the greatest respect to the right hon. Gentleman, is probably held in more respect at Filton than either the right hon. Gentleman or I, as the person who prevented the Labour Government from cancelling the Concorde project.
The enthusiasm of the right hon. Member for Bristol, South-East—I say this in all sincerity; he is a man whom I greatly admire, because his enthusiasm is a guiding light to many of us in the way that he seeks to promote the fortunes of the aircraft industry; I do not say that in any way disparagingly—is something for which we can all be grateful. But discretion is the better part of valour.
The right hon. Gentleman has described the decision on the RB211 as
the most important industrial decision announced in the House since the war."—[OFFICIAL REPORT, 8th February, 1971; Vol. 811, c. 61.]
Few of us would dispute that. It falls to Governments to make decisions in one of two categories. One is a decision when legislation is introduced based on deliberate, thought-out policy. The other is a decision which has to be taken dictated by circumstance.


As regards deliberate policy decisions I can think of the present Government's Industrial Relations Bill and their east of Suez policy as things which were worked out beforehand, presented to the electorate, and brought to the House. As examples of legislation dictated by circumstances I can think of the U.D.I. situation in Rhodesia which faced the last Government—I will not comment on that—and the Rolls-Royce situation with which the present Government are faced.
This Bill is the product of a decision dictated by circumstances. My constituents and the country want to know who created these circumstances. This is not idle recrimination. It is a question to which an answer is required. The hon. Member for Stockton-on-Tees (Mr. William Rodgers) touched very nearly on the point which concerns so many of us when he spoke of the need for clarity of understanding of Government responsibility and Government attitudes towards Government business and contracts in which Governments are involved.
It is fairly obvious that without launching aid the RB211 engine would never have been launched. If we had had no engine, we would have had no contract. If we had had no contract, Rolls-Royce would now be a normal, solvent company.

Mr. William Whitlock (Nottingham, North): The hon. Gentleman cannot say that.

Mr. Adley: I can say it and I do say it. Many people better informed than I are saying that the sole cause of the present troubles at Rolls-Royce is the RB211 engine. I should have thought that this was not a particularly contentious statement. The Government, by interfering—I use the word in a market sense—in a relationship between two commercial companies have accepted responsibility to a greater or lesser degree for the contract with which they were concerned.
The right hon. Member for Bristol, South-East has said recently that it was not the contract that was wrong. I contend that it was the contract that was wrong. If the Government did not think that it was the contract that was wrong, why did they send in the I.R.C. to investigate the circumstances of the contract? If the I.R.C. did such a good

job, why at the end of its visit to Rolls-Royce did simply produce another £10 million and not do something much more drastic—a step which has been forced upon the present Government in the circumstances in which we find ourselves today?
Right hon. Members opposite have mentioned the difference between the Concorde contract and the RB211 contract. Adverse comments are frequently made by opponents of the Concorde about its contract. The Olympus 593 contract and the Concorde contract has one over-weaning merit, in that nobody is in any doubt that the British Government are responsible, with the French Government, for the conclusion of the contract. This is a situation in which the RB211 contract has never been. There has never been that certainty about the responsibility that is associated with the Concorde project and the Olympus 593.
Shall we ever know just what was the responsibility of the last Government towards Lockheed, and shall we ever know just what Lockheed thought about the previous Government's involvement in that contract?
I submit that Lockheed's position in contractual arrangement with Rolls-Royce alone would have been fair and clear, but Lockheed, in contractual arrangement with Rolls-Royce plus a British Government is unfair, unless the British Government at all times make their relationship, their commitment and their financial contributions crystal clear to all the parties to the contract.
I believe that Lockheed may have been misled. Whether it was by mistake, by misunderstanding or by misdeed I know not, but I believe it possible that Lockheed was misled into believing that the previous Government were prepared at all costs to pick up the tab for anything which may or may not have gone wrong with the RB211 contract.
To prove that point I give the House three particular illustrations. First, on 1st April, 1968 the right hon. Member for Bristol, South-East, answering a question in the House, said this:
… this is an interesting example of a partnership between Government and industry which has made this possible."—[OFFICIAL REPORT, 1st April, 1968; Vol. 762, c. 45.]


The use of the word "partnership" surely implied that there was indeed a depth of relationship between the previous Government and Rolls-Royce on that contract, something which appears to be refuted now.
The Air Holdings deal, about which more will no doubt be said, is a second example of a quite clear British governmental involvement to back up Rolls-Royce in that contract.
Finally, the launching aid, for the first time exceeding 50 per cent. on that contract, was a third crystal-clear indication of how the last Government were backing up Rolls-Royce in their efforts to see this contract through.
My aim is not to recriminate, but my constituents are entitled to know these facts. I therefore suggest that the words of the hon. Member for Stockton-on-Tees be taken seriously to heart by the Government in a bid to ensure that we do not have any more government by hint and government by implication, because that is what has got us into this situation.

Mr. E. S. Bishop (Newark): I am sorry to embarrass the hon. Gentleman, but I ask him, when he has a few minutes to spare—he need not hurry, because the Bristol Evening Post has gone to print—to go to the Library and look at Early Day Motion No. 226, which was signed by 64 of his right hon. and hon. Friends and which congratulated Rolls-Royce Limited
on the magnificent outcome of their sustained efforts to capture for Great Britain such a major share of the United States aero-engine market
and commended
the co-operation of the financial institutions of this country"—
there was no mention of the Government at that time—
which assisted so materially this British triumph.
I might add that five members of the present Government were signatories of that Motion. As the Motion then gave no credit to the Labour Government, surely there can be no blame at this point.

Mr. Adley: To mention that the Bristol Evening Post have gone to print is rather cheap. Unfortunately, the hon. Gentleman failed to read out the Motion in

his name which mentioned the previous Government and left even more confusion amongst anybody who might have read both Motions to which he has referred.

Mr. Onslow: May I remind the hon. Gentleman that neither he nor any other signatory to either Motion knew that the contract on which this whole deal turned had not in fact been seen by his right hon. Friend at the time when the statement was made?

Mr. Adley: I am grateful for the interventions of hon. Gentlemen on both sides of the House. One has to look to the future. In the Bristol Evening Post of last Friday, the right hon. Member for Bristol, South-East was quoted as saying:
Looking back on the decision taken in March, 1968, I am certain that any Government would have done what we did then.
I do not think that to be a true statement of the attitude of the present Government towards the expenditure of public money on a contract. The present Government intend to look much more closely before they commit any large sums of public money for any contract.
My concern is for Concorde. On that basis I want to refute the suggestion that the RB211 decision will adversely affect the future of Concorde. This is not true. The British Aircraft Corporation do not believe it to be true. Anyone who suggests this possibly misunderstands the mentality of American business men, and those responible for the American airline industry, towards this great aircraft or any aircraft. The Americans will not buy or fail to buy Concorde because they feel that we are nice chaps. They will buy Concorde because they believe it to be a first-class aircraft, and primarily because B.O.A.C. and Air France will buy Concorde and the Americans cannot be left out of a competitive position.
I almost unreservedly support the Bill, in the belief that it is in the best interests of Concorde.

Mr. Raphael Tuck: On a point of order. May I repeat my entreaty to your deputy, Mr. Speaker, earnestly to ask hon. Members to limit their speeches to ten minutes.

6.43 p.m.

Mr. William Whitlock (Nottingham, North): I shall make what is almost wholly a constituency speech. I make no apology for that. It is evident that it is completely unclear what charges on the public revenue would be made by the Bill and what assets and undertakings of Rolls-Royce would be taken over. All is uncertainty. Involved in that uncertainty are the wives and families of employees of Rolls-Royce, and others who are now haunted by doubts and fears about the future.
Without the human assets the financial and physical resources of which we are speaking are of little use. During last weekend all hon. Members will have had the opportunity of seeing in their constituencies just how profoundly shocked were the public by the events of last week. In my experience, people everywhere have been saying that something must be done to restore Rolls-Royce to the pinnacle from which it has fallen. The nation finds it difficult to accept that this famous company is, in the phrase of the right hon. Gentleman opposite, a lame duck. To many people it is a powerful eagle, temporarily incapacitated because just once it has aspired to reach heights which are for the moment beyond its strength. That single error of judgment in a long history of brilliant achievements has brought it down, but with proper support it can aspire to heights to which others only lift their gaze. It must be given that support.
If members of the public received the news of the company's fall with a sense of profound shock, what of the employees of the company? In Monday's debate my hon. Friend the Member for Derby, South (Mr. Walter Johnson) spoke very movingly about the impact of the news upon the employees at Derby. During last weekend I spoke with Rolls-Royce employees at Hucknall, in my constituency, where the flight testing establishment of the company operates. At Hucknall, many of the problems of the RB211 have been overcome, and there the engine has been flight-tested on the VC1O flying test bed. I have always found that the men who work at Hucknall believe with a quiet confidence in their skill and craft. They have always shown a consciousness of being guardians of a reputation which has been Britain's pride and the envy of

the world. They are numbed and shattered by what has happened, and even now they find it difficult to believe that the company to which they are so loyal has been brought so low. They are asking day in and day out, "What can we do to help?" If faced with a problem in the ordinary way, they are the kind of people who will solve it. If they could they would certainly bend all their efforts to overcome the present great difficulties of the company. That is why it was so unfair of the Prime Minister, in a television broadcast last weekend, when he spoke to a Conservative meeting, to imply that wage inflation had been partly responsible for the troubles of Rolls-Royce. There have been no great wage increases at Rolls-Royce in the last three years during which the RB211 has been in the process of development.
Industrial relations at Rolls-Royce are excellent. Negotiations took place in a very responsible way over nine months last year to produce a job evaluation payments scheme, under which every job in the factory was evaluated on 27 characteristics. The employees are only just beginning to feel the benefit of that scheme. That is why they are very upset by the Prime Minister's remarks. They feel that the increased costs seem mainly to have come about from the failure of Hyfil—the use of carbon fibre for the RB211's turbine blades—and the switch to titanium, together with the large world increase in nickel prices.
It has often been pointed out that many of the troubles of the British aircraft industry date from the late 1950s, when another Conservative Government produced a White Paper which shifted the defence emphasis from aircraft to rockets. Dr. Alexander Smith, a former Rolls-Royce executive in charge of the aero-engine advanced research programme, pointed out last week that certainly Rolls-Royce's problems began at that time, when the company decided as a matter of policy to ensure its survival with civil engines. Dr. Smith said that Rolls-Royce crashed because it was run by technical men and not by financial men. In an industry which has the difficulties of ever advancing technologies and the problems of selling in a market so much influenced by international politics, there are exceptionally high risks. But always in the past the imagination and


know-how of technical men at Rolls-Royce have brought achievements which the financial men would not have achieved. They would not have achieved it because, in most cases, they would not have attempted those achievements. The pay-off is always in the uncertain future and success can never be guaranteed.
In the case of the RB211, because the faith of the technical men has proved too great, they have failed financially; yet by all accounts the engine is a great success technically. On Monday, the Minister of Aviation Supply suggested that it was behind engines of equivalent power and performance. But that is not a view that I have read or heard anywhere else, and it is not one which the employees at Hucknall have gained. In my view, the right hon. Gentleman did Britain a great disservice when he made that remark.

The Parliamentary Secretary to the Ministry of Aviation Supply (Mr. David Price): I am sure that the hon. Gentleman does not intend to misquote my right hon. Friend, who made it clear that where the engine was behind was in time and delivery dates—[HON. MEMBERS: "No!"]—and he was pointing out the consequences commercially.

Mr. Whitlock: Whatever the right hon. Gentleman intended, what he said was quite different, and it has had an enormous impact round the world.

Mr. Robert Sheldon (Ashton-under-Lyne): Will my hon. Friend give way?

Mr. Whitlock: No, I must not give way any more I want to keep my remarks brief, because I know that a number of hon. Members wish to speak.
I have here the house journal of the Lockheed staff. It is dated 19th November, 1970, and it says:
TriStar's first flight perfect",
and goes on:
L-1011's quiet, clean performance only 25 minutes after time forecast 2½ years ago …
Then there are the reported comments of people who were there. Someone said:
If I'd had my back to the runway, I wouldn't have known it went by.
There were comments about the quietness of the engine and about the fact that

there was almost no smoke from it. Someone said:
It must be burning alcohol—there's practically no exhaust emission.
If time permitted, I could go on down the list of eulogies which appear in Lockheed's magazine.
The engine is late, of course, and that is the cause of a lot of the trouble.

Mr. Onslow: That is the point.

Mr. Whitlock: But, so far as I can gather, it has had no development problems to be solved which are not of a nature normally to be encountered in the development of a new engine of this character, although, in an engine so large, the problems are on a larger scale. Because it is a great engine, the faith of the technicians should be underwritten. The RB211 should continue. It is more sensible to see that it does than to pursue the senseless east of Suez policy so beloved by right hon. and hon. Gentlemen opposite.
Repeatedly, the failure of Rolls-Royce has been described as a tragedy. Involved in it is the threatened tragedy of the break-up of the teams which have made the name of Rolls-Royce a synonym for technical perfection. One of the teams is the one at Hucknall where the company's flight testing establishment is situated and where engineers, specialists and experts in a number of fields carry out their research and development in an atmosphere of sustained enthusiasm and dedication. That unique team must be kept together. It is important to the nationalised company and to Britain that it be preserved.
When the Government come to decide the full scope of operations to be undertaken by the nationalised Rolls-Royce concern, I hope that they will ensure that the Hucknall team remains as a body of men who will keep Britain in the forefront of aero engine technology.

6.55 p.m.

Mr. Ian Lloyd (Portsmouth, Lang-stone): I hope the House will forgive me if I am unusually brusque and do not conform to the normal courtesies in congratulating my hon. Friend the Member for Hendon, North (Mr. Gorst) on his maiden speech.
Few hon. Members are here very long before they realise that the gulf which


separates the two Front Benches is a variable factor. There are times when it seems as wide as the Atlantic. There are others, like this evening, when appropriately it seems as narrow as the Derwent. There are even times when the banks almost touch. I am sure that everyone who has spoken or who intends to speak will feel the most profound concern about what has happened, what is being done by the Government and what we as a nation should be doing.
I must first declare my manifold interest in this debate. The first is an unusual one in that, a long time ago, I spent three or four years writing a history of this great company. During that time I developed a profound respect not only for the management and administrators but for everyone concerned with this very great British company. That respect has never left me. My second interest lies in the fact that I have a considerable branch of Plessey in my constituency, an aerospace firm which is bound to be affected by what is happening. Then, in a miniscule way, I am a shareholder in the aero company, and, finally, I have a remote connection with Air Holdings.
Some years ago, the American Army was in the greatest difficulty, retreating from Korea. George Kennan wrote to the then Secretary of State Dean Acheson and said:
… almost everything depends from here on, on the manner in which we … bear what is unquestionably a major failure and disaster to our national fortunes … if we try to conceal from our own people or from our allies the full measure of our misfortune, or permit ourselves to seek relief in any reactions of bluster or petulance or hysteria, we can easily find this crisis resolving itself into an irreparable deterioration of our world position and our confidence in ourselves.
I suggest that every word that Mr. George Kennan used on that occasion can be applied today to this company, because we are concerned basically with this question of confidence.
Have we the confidence that we should have in the decisions that have been taken over the last eighteen months? First, let me clear away one piece of doctrinaire trench warfare. We are not really talking about private or public enterprise. I discovered long ago that Rolls-Royce is a peculiar type of firm which I would describe as an aero-space hybrid, and that is more true today than when I first

realised it. More than half its gross revenue from 1934 onwards and much of its investment has been derived from the State. That does not devalue the important functions that it has exercised in its private enterprise capacity.
I suspect that some decisions were taken in that firm in 1940 which, had the firm been a national dependency, would not have been taken. Had those decisions not been taken, we would not have produced the upgraded Merlin, we would not have won the Battle of Britain, and we would not have been sitting in this House today.
I turn now to the reasons given for the actions of the last few days. It seems to me that these have to be explored in depth. First, I would like my right hon. Friend to define the term "insolvency", with which the whole House has had difficulty.
What has been quantified? What can be quantified? We are dealing with a situation which has been created by judgments about one form of unquantifiable amount and another form of unquantifiable amount. My right hon. Friend said that the insolvency was caused by debts already incurred and likely to arise. I am sure that the House wants to know and must know where the dividing line between the two amounts lies.

Mr. Tomney: In this country, there is not and never has been an efficient force of cost control accountants in specialist industries like this one. A remarkable feature of this contract is that, taking into account the penalties, and so on, the price now works out to within a few £s of the original tender of the General Electric Company of America. Does not that prove that American cost accountants are more efficient in their job than people in this country? Surely that is the kernel of the problem, and it has been the trouble in the aircraft industry for 25 years.

Mr. Lloyd: I find myself very much in agreement with what the hon. Member has said, and I am coming very precisely to this point. May I return for a moment to the question of the unquantifiable, because it seems to me that this whole decision has been based on an assessment of RB211 costs plus Lockheed plus airline claims versus an estimate, whatever it may be, if it has been


done, of the whole of the Rolls-Royce range of technological expertise, goodwill, etc. The Government may quantify the first item at £300 million or something of that size, and I can certainly quantify, subject to many disagreements, the latter at a figure of the order of £500 million. But both, I suggest, are purely speculative figures and this decision has arisen from a purely speculative assessment of this kind.
I ask therefore—and the Minister must inform the House and the country—was this insolvency caused by an immediate cash-flow problem or was it not? The second point I would like to put very directly to the Government is whether the legal advisers to the Crown advised directly and specifically on the American legal implications of the contract? If they did the Minister should advise the House on precisely what advice was given.
May I turn briefly to what is known as the "exceptional" RB211 situation. I believe I am going to be of help to the House in this matter. How exceptional is it? We have had considerable British experience of cost overruns as hon. Members on both sides of the House will know. Those who follow these matters will be familiar with the Elstub Report and the Downing Report, both of which have dealt with the problem and uttered grave warnings which successive Governments have in some instances ignored.
I will ask the patience of the House while I turn briefly—because the experience is broader though equally relevant, and much more documented—to American experience.
I would like to quote American cost data on comparable contracts. We have Minuteman where the estimate was 2·69 billion dollars and the actual cost 5·36 billion dollars. We find for the C-5A, a major Lockheed aircraft, the original contract was 2·6 billion dollars The final figure at the moment is 3·9 billion dollars. For the F15 the 1970 estimate for research and development alone was 1·1 billion dollars and the 1971 estimate for research and development is 1·77 billion dollars; and so we go on. For the B-1 bomber the 30th June estimate was 1·8 billion dollars and the June 1971 estimate is 2·3 billion dollars. So we are not

talking of an "exceptional" situation at all. The production cost for 200 plus aircraft was 7 billion dollars.
In evidence to the Committee on Armed Services in the United States the following statement was made by a very senior official from the Department of Defence:
The actual performance on major aircraft programmes has averaged about 85 per cent. of the performance proposed by the contractor.… Under conventional contracts actual costs of major defence systems exceeded original estimates by very wide margins—often by several hundred per cent. and rarely below 100 per cent.
Overruns reported to the United States Congress on 29th December, 1969, in the total defence field totalled 20 billion dollars. That was the escalation the United States Congress had to approve in 38 major defence systems.
Turning briefly to the question of contract "over-optimism" to which the hon. Member opposite has referred, Dr. Forster, a senior official of the Department of Defence, had this to say to the United States Congress on this problem in talking of firms which had been forced by their own contract mistakes to the point of insolvency:
Whether to go beyond that point and force him into bankruptcy is a much harder question. We would have to determine very carefully who was at fault and to what degree. Further, we would have to understand what the Department of Defence would gain and what it would lose if we were to pursue our legal position to the bitter end.
Going to another piece of evidence, which, again, I believe will interest the House, Mr. Preston in evidence to the same Committee said:
Since the now famous letter from Lockheed requesting financial relief from its connection with the C-5A, how many other development contractors have contacted the Department of Defence … to request some measure of financial relief for themselves?
He suggested the figure was of the order of 400. Following a typical American Congressional procedure, this was read into the record and the number of cases was 1,105. So we are not talking at all of an exceptional situation but of something which is absolutely typical and essential to the problems of major aerospace hybrid companies of which Rolls-Royce is an example. May I come now to evidence given by the Assistant Secretary of State, Mr. Charles, on this very point. Perhaps hon. Members opposite


will not like this very much, but it is nevertheless essential to the case:
Contracts which are devoid of financial risks are standing invitations to massive cost overruns and less-than-promised technical performance. Experience indicates that these invitations are rarely declined. And this makes rational defence planning almost impossible. It makes choices both among defence programmes and among national programmes erratic to the verge of irrationality. It is utterly unacceptable as public policy—economically, socially and morally.
Finally—and I hope this will interest the House more than anything else—Mr.Haughton, the Chairman of Lockheed, himself gave evidence to the Armed Services Committee. He said—and I believe the House would like to know this:
The issue is this—do the people of the U.S. need the kinds of produce we produce. If they do they should procure them from the most efficient companies available. If procurement on that basis excludes Lockheed, then we will have deserved it.
This is an interesting insight into the philosophy of the Chairman of Lockheed:
We should be subjected to the most searching examination of our performance … but … the report of such examination should be objective, balanced and above all, true.
Certainly, we would ask for that in the case of Rolls-Royce. On this particular project which committed his company for an eight-year stretch he said:
This risk (over eight years) would have been far beyond the resources of any aerospace contractor in the country
—this is the United States—
if the contract had not provided some means of adjustment for actual but unpredictable changes in the economic or technological environment.
This is the fundamental situation about which we are talking, not about public or private enterprise but about something absolutely new. Mr. Haughton continued—and this is the main conclusion I would draw:
The work should be undertaken by private enterprise but the technological/inflation risk must be underwritten by government
because it cannot be underwritten by anyone else. Again, referring to a point made by my hon. Friend, Mr. Haughton himself dealt with the essential difficulty which he felt both the Department of Defence and the Chairman of Lockheed himself were facing in dealing with this this problem. He said:
The Government needs procurement techniques that can protect its interest, maximise

competition and yet be flexible enough to permit strong technological advances, minimise cost surprises and improve its fiscal planning.
Industry needs such improved techniques to permit it to do sound work, deliver top system performance and yet not fall under public suspicion because of unavoidable costs that cannot be anticipated …It is becoming increasingly apparent that there is an extremely delicate point of balance in the procurement of effective weapon systems.
The RB211 is indistinguishable from a major component of an effective weapon system.
I propose to finish with a number of questions which I would like to put directly to the Minister because I believe they should be answered. Did either Lockheed or the airlines at any stage ever talk of invoking penalties? My information is they did not. What advice did the Government take on the operation of New York law? Were Rolls-Royce's American lawyers consulted at any stage? My information is that they were not. Was there a cash flow problem? Had the banks warned either the Government or Rolls-Royce that its overdraft limit had been exceeded or was likely to be exceeded? My information is that they were not.
What information have the Government now on the cost over-runs on the most profitable aircraft, the JT9D? In the interests of British technology and British reputation, this should be known. This is no isolated case, and the comparisons must be made on a much broader front. [HON. MEMBERS: "Hear, hear."] On the morning of 3rd February, was there by any chance a leak from the White House which precipitated this débacle? There is a suggestion that that took place. We ought to know. What estimates, if any, have the Government made of the goodwill and the know-how of Rolls-Royce? They may have been made, but we have not been told. Again, we should know.
As the RB211 has, I understand, run at 43,000 lbs. thrust and 100 degrees temperature penalty, and at 38,000 lbs. thrust meeting the full specification in the contract, and since the estimate of completion to full specification without temperature penalty is a matter of four months off, do the Government accept that, and are they proposing to extend their period, perhaps, from one month to four?


Finally, to what extent has Rolls-Royce's whole management policy in the last few years been inhibited by Government policy in the widest possible sense from the type of rationalisation which that company is now being asked to undertake over the broadest possible front?
I consider that we are entitled to have answers to those questions.

7.11 p.m.

Mr. Bruce Millan (Glasgow, Craigton): We have just heard an extremely interesting and courageous speech from the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd)—[HoN. MEMBERS: "Hear, hear."]and I congratulate him on it most sincerely. In particular, I endorse his call for the Government to be a good deal more frank about all the circumstances leading up to the receivership last week. I entirely support the hon. Gentleman in all the questions which he put to the Minister, and my contribution to the debate will be very much in line with what he said.
I shall not go over the long history of the RB211, but I wish to take up the story as from 22nd January when Lord Cole approached the Government and informed them that there was difficulty about the RB211 contract from the point of view of Rolls-Royce. We have yet to hear from the Government a coherent story about what happened between 22nd January and the announcement by Rolls-Royce on 4th February that it was calling in a receiver on behalf of the debenture holders.
On Monday the Chancellor of the Exchequer said that when Lord Cole gave the bad news to the Government, there were only two choices open to them—this is c. 57 of HANSARD—either the Government could have decided to enter into an open-ended commitment to keep the RB211 going, or they could have entered into an open-ended commitment to meet the run-down costs in the event of the RB211 contract being cancelled.
In fact, there were several other courses open to the Government as from 22nd January; the two posed by the Chancellor by no means represent the only choices which they had. For example—this is the most important question of all, I think—the Government could have taken up the question whether the Lock-

heed contract could have been renegotiated in the period after 22nd January. First, we want from the Government an explanation of why that was not done.
The only sort of explanation we have had so far has come from the Minister of Aviation Supply, who said that after 22nd January the directors would have been in default under Section 332 of the Companies Act if they had carried on the business of Rolls-Royce. I state as dogmatically as I can that that is absolute nonsense. Any suggestion that the directors would have been liable under Section 332 if they had attempted genuinely to renegotiate the Lockheed contract does not bear serious examination. [HON. MEMBERS: "Hear, hear."] Section 332 refers in terms to "intent to defraud creditors". Does anyone seriously suggest that if Lord Cole and his colleagues had attempted to renegotiate the contract they would have been attempting to defraud the creditors of Rolls-Royce? The proposition is absolute nonsense.
That is true even if the directors had tried to renegotiate the contract on their own, but a fortiori it must be true if the directors had attempted to renegotiate it with the assistance of the British Government, because then it would be imposible to argue that Section 332 of the Companies Act could in any circumstances apply.
The Minister of Aviation Supply plainly does not understand Section 332. When my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) quoted from the Section words relating to intent to defraud, the Minister said that the question of intent to defraud did not enter into it at all. But Section 332 deals with exactly that. It does not deal with the carrying on of one's business temporarily when one is not able to meet one's immediate requirements; it deals only with carrying on a business with intent to defraud creditors. So that excuse is very thin, and I shall be interested to see whether the Solicitor-General substantiates what Ministers have so far said about it.
One can draw only one conclusion from this strange history between 22nd January and 4th February. The Government told the directors that in no circumstances would they put additional Government


money into Rolls-Royce unless Rolls-Royce called in the Receiver. That is why the decision was taken to call in the Receiver—because the Government made clear that they were not willing either to put in additional money or to enter into any renegotiation of the contract unless the receiver was called in. The purpose of calling in the receiver was to enable the Government, along with Rolls-Royce, to renege on their obligations to Lockheed.
Again, the suggestion that this was done to protect the creditors does not bear serious examination. Where do the creditors stand now that the receiver has been brought in? None of us knows what the exact figure is, but at 31st December, 1969, there were £62 million worth of trade creditors shown in the Rolls-Royce balance sheet. The figure must be considerably more now, and many of them are the sub-contractors about which so much concern has been expressed today. How do the creditors and sub-contractors come out of the present position. What sort of settlement will be available to them from the receiver?
It depends, first, on the Government's purchase price for the assets of Rolls-Royce. We have heard absolutely nothing about that today, and the Minister has been only too anxious to avoid any kind of commitment.
Second, it depends on whether the RB211 contract is cancelled. If the contract is cancelled, what will damage the creditors most of all will be the very substantial claim by Lockheed for cancellation charges. Figures of £50 million or £100 million have been mentioned in this respect. One does not know what the figure will be, but this is why it is very much in the interests of all the creditors and sub-contractors, whether they have been involved in RB211 work or not, that the contract should go on and that the Receiver or the new company should not be responsible for cancellation charges to Lockheed.
Incidentally, it is not just a question of the extent of the Lockheed claim. What matters also is the legal complexities likely to be involved. I forecast that if the contract is cancelled and there is a substantial claim from Lockheed. it will

take a long time to sort out the legal consequences, and the sub-contractors and creditors will be likely in that situation to receive no payment whatever because the receiver will have no idea how much money he will have available to meet the various claims made upon him.
The history of the last fortnight is utterly discreditable to the Government. They put the company and have now put themselves in an extremely difficult situation, not only prejudicing the position of our leading aero-engine company but prejudicing also the existence of many other firms in this country which entered into financial commitments with Rolls-Royce over the years. I look forward with interest to hearing from the Solicitor-General tonight, but I do not for a moment imagine that he is very happy that the Leader of the House committed him to make a statement during this debate.
Why did the Government act in this way? Why did they contract out of any kind of financial obligation? I think that it is partly for the reason given by my right hon. Friend on Monday, that they were more interested in sixpence off the income tax than in any other factor in the situation. It may also have been because the Government felt in some peculiar way that if they acted tough it would improve their negotiating stance when eventually they had to deal with Lockheeds, the United States Government and the United States airlines. This is a miscalculation. It does not seem to have occurred to the Government that if in foreign policy or anything else we base our policies on the principle that we look after British interests and to hell with everybody else, there is no reason why other Governments and outside interests should not deal with us in exactly the same way.
Why should the American Government help to bail out the British Government when we have acted in such an unprincipled way? Why should Lockheed be willing to help out the British Government in this situation, when they have been dealt with with such a lack of candour and so shamelessly by the Government over the past two or three weeks? Unfortunately, the Government's so-called defence of their attitude irretrievably weakens their position in the negotiations that we shall now have to enter


into with Lockheed, the United States Government and the airlines in the United States.
Therefore, I am sorry to say that I am not optimistic that we shall be able to get out of this situation an acceptable renegotiation of the Lockheed contract, although I hope very much that we shall be able to get a suitable renegotiation.
It has been said already in the debate that, technically, there are no problems with the RB211 engine which could not be overcome. The hon. Member for Portsmouth, Langstone pointed out that the escalation of launching costs and the various technical difficulties in the project are no different from what has happened with very many other defence and civil contracts in the aerospace industry both in the United States and in Britain over the past 10 or 15 years. The problems are not technical but are basically financial.
We have had very little frankness from the Government on what exactly is involved in the way of finance. In view of the Government's handling of the situation and the bitterness they have caused in American circles in particular, if we are to have a successful renegotiation of the contract the British Government will have to accept that they will have to bear a substantial part of the financial burden.
It is no use saying that we shall enter into the negotiations on the basis of driving the toughest and hardest bargain that we can with the Americans. It goes without saying that we should try to do that. But to go into the renegotiations on the basis that the Americans will bail us out and bear the main financial burden would mean that we have no prospect that any renegotiation will eventually be agreed. Therefore, we must have from tonight's debate at the very least an assurance from the Government that the £42 million and, for that matter, the extra £18 million talked about by the Government last November, remain at a minimum commitment by the Government when they enter into the renegotiation of the Lockheed contract. Unless we have an indication that there is such a minimum commitment I do not believe that the renegotiation will be any more than a squalid farce partly at the expense of Rolls-Royce workers and sub-

contractors. If we do not get a renegotiation, the effect of direct and indirect redundancies in very many firms throughout the country will be absolutely disastrous.
It is realised that the main RB211 effect will be on Derby and the Derby area, but if there is not a satisfactory settlement of the RB211 and a satisfactory arrangement for creditors and subcontractors the damage will spread over all firms—whatever the work they have been doing for Rolls—Royce which have been engaged in Rolls-Royce work over the last two or three years.
Indeed, one of the really frightening features of the present situation is that some of the earliest redundances have been declared in firms which were not involved in RB211 work at all but are declaring redundancies because they now find themselves so financially overstretched that they cannot carry on business.

Dr. Gilbert: Does my hon. Friend agree that the situation is even more serious, that the whole attempt to rescue Rolls-Royce could be totally vitiated if the sub-contractors go under?

Mr. Millan: My hon. Friend is on a very good point, and I hope that he will be able to elaborate it. The situation is a good deal more serious than the Government have been willing to admit, and certainly a good deal more serious than they expected when they allowed the receivership to take place last Thursday.
There will be a serious effect in my own area in Scotland and all over the country unless something is done about rescuing the RB211 contract. More than that, there will be a considerable loss of confidence in the British aero-engine industry. Even if we come out of this situation with a reasonable amount of credit—and I am sorry to say that I see very little sign of that at present—the blow to Britain and Rolls-Royce may very well lead to a gradual running down, a gradual decline, of the Rolls-Royce organisation. It is very important that the Government should restore confidence as much as they can and as quickly as possible.
The Minister's speech today was disgraceful. He spent more of his time


trying to placate some of the backwoodsmen on his own benches than in dealing with the real issues. Unless we receive satisfactory answers in the winding-up speech some of us on this side of the House will, I hope, carry on the debate into the Committee stage. Of course we accept the Bill; we cannot do anything other. But before allowing the Bill to pass today we shall have to obtain clearer and franker explanations from the Government on all these matters than we have had so far.

7.28 p.m.

Mr. Norman Tebbit (Epping): Like every hon. Member who has spoken or who wishes to speak, I feel most strongly about the fate of Rolls-Royce. I was a user of Rolls-Royce in my previous career. I think that I have been supported in flight by Rolls-Royce for over a year of total flying time. One gets to be fond of a company and its products, but we must look critically at the company and its products, too. I believe that is what is being done today.
I am glad that there has not been too much talk of personal responsibilities, particularly of the personal responsibility of the right hon. Member for Bristol, South-East (Mr. Benn). He did what any Socialist planner would have done. It was a copy book exercise in State intervention, and it came to a copy book end. He provided Rolls-Royce with the means for the self-deception to be carried on to its ultimate. It is no good now his hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers) talking about the balance on the board of Rolls-Royce between accountants and engineers. Those words received some approval from hon. Members behind him. I am sorry that he did not use the word "entrepreneur" as well. Perhaps that, too, would have got some support.
We cannot blame the former Minister, either, for failing to see the technical weaknesses that have shown themselves in the RB211. I think that it was entirely a matter on which he had to rely on advice, and he accepted the advice. But he ignored some small warnings which were offered. In April, 1968, my hon. Friend the Member for Woking (Mr. Onslow) asked him whether he was satisfied that sufficient financial and physical resources would be available to Rolls-

Royce to enable the RB207 to be de. veloped. The Minister's reply was to the point. He said:
We are confident—and indeed it was our duty as the sponsors of the 207 engine for the European airbus to be confident—that Rolls-Royce can do the 211 for the Lockheed airbus and the 207 for the European airbus within the time scale. But if the hon. Gentleman says that this will mean a supreme effort by Rolls-Royce, there i3 nothing new about that, and we are confident that Rolls-Royce can make it" —[OFFICIAL REPORT, 1st April, 1968; Vol. 762, c. 47.]
The right hon. Gentleman was warned.

Mr. Onslow: I am grateful to my hon. Friend for reminding the House of the question which I put at that time and which I would have been too modest to mention now. Before the right hon. Gentleman seeks to ride off on the ground that my question did not refer to the RB211, is not the implication that he must have been confident about the first in order to have been confident about the second?

Mr. Tebbit: One cannot again blame the right hon. Gentleman for accepting his advisers' advice to back Rolls-Royce on this contract, although there is some doubt now as to the exact degree of knowledge that he had of the contract. Until this evening I was sure that he would not have accepted on behalf of the Government any form of open-ended commitment in the contract, but then I heard the quite remarkable speech of the right hon. Member for Wednesbury (Mr. Stonehouse) in which he implied that, whatever his master may have said, there was an understanding between the Government, Rolls-Royce and Lockheed that there was some other form of commitment that Rolls-Royce would not be allowed to fail whatever happened and that this project would go through. We have not heard until this debate the positive assertion that there was a commitment to which the Government were in honour bound.
I think that there is just a chance that we may be able to see this contract re-negotiated. My understanding is that, technically, the engine can be got to the right state. I understand that it will involve considerable delay and considerable expense. But Aviation Week, in this week's issue, estimates the cost of adapting the 10-11 to the Pratt and Whitney or General Electric engines as about


£30 million or £40 million, with a delay of a year. That offers some hope for the RB211.
What is very much less hopeful is the news in the same issue that another major airline has backed out of its order for DC 10s, the very competitive aircraft to the TriStar, which means that Douglas has open places on its order book from airlines which have backed out of DC 10 orders. We have cause to doubt very much, whether or not the RB211 crisis had blown up in this way, whether the 10–11 customers would have gone on with an aircraft which was going to be late in delivery because of the engines when there was the possibility of going into another aircraft which was on time.
Finally, I want to refer to the interests of the employees of Rolls-Royce. We should think about them very deeply. But we should also recollect the sums of money involved. The suggestion is that the engine is now going to cost £170 million plus in launching aid, with probably about £60 million loss on production costs for 540 engines. There is not much prospect of engines beyond that number being ordered, for the TriStar is not looking like the success of all time, and there is no British airframe on which to hang the RB211. I think also that General Electric and Pratt and Whitney would be loth to let Rolls-Royce get a foot in again.
We have the possibility of penalty clauses. We have over £300 million at stake. Even to put it lower and suggest that only £200 million is involved and set that against the number of jobs involved, would any Minister, in all seriousness and rationality, come to this House and propose a scheme for creating jobs at £10,000 or £20,000 a head unless there was another very substantial benefit?
The only other very substantial benefit that one can see is the continued existence of a high-technology Rolls-Royce. The Bill provides—and it is for this reason only that I support it—that Rolls-Royce's main functions in the aero-engine division will be kept together as a single unit. I do not think that that depends absolutely upon the existence of the RB211. I believe that there is a viable future for Rolls-Royce without this. I think we all have to face the fact that we

can over-stretch ourselves in this sector of technology and that, as I have put it on another occasion, if building cathedrals is unprofitable it may be more prudent to bid for the concession for the Coca-Cola stand on the building site and make a profit out of that than to go bankrupt building cathedrals.
I hope that this is the view of the Government. I believe that it is. I am unhappy to see a great company go into public ownership but I will support the Bill the more happily because of my feeling that the Government intend that, if it is possible, the company should be returned to private ownership and because I believe that this company is absolutely vital to our national defence.

7.37 p.m.

Mr. Phillip Whitehead (Derby, North): The whole House will appreciate that this is a debate in which party lines have not been strictly followed. The glum faces of some hon. Members opposite when listening to the hon. Member for Epping (Mr. Tebbit) sharply contrasted with the enthusiasm aroused on both sides of the House by the speech of the hon. Member for Portsmouth, Lang-stone (Mr. Ian Lloyd). The searching questions which he asked, with which I want to associate myself—as do many of my hon. Friends—point directly to the kind of answers we hope to get later both from the Minister and from the Solicitor-General.
I particularly commend what the hon. Member for Langstone said about the rôle of public investment and accountancy to the hon. Member for Hendon, North (Mr. Gorst), whose maiden speech we heard earlier. It is my pleasant duty to add my own congratulations to the hon. Member for Hendon, North on his speech, since he has now joined us again. I knew him in my professional life before coming to this House in his rôle then as a highly successful lobbyist in broadcasting. It seems from the gap he has already opened up between the Government and himself on this issue that he is emulating other members of his family, and he may start a Fourth Party again. I hope that we shall hear him again in future.
When I made my own maiden speech a few months ago, I made less than the


conventional references to my constituency in Derby. I did so deliberately because it seemed to me that the virtues of Derby were largely self-evident and that Derby was associated with a whole range of advanced and excellent engineering design and technology which did not need reiterating. The position is rather different now.
Over the last week my hon. Friend the Member for Derby, South (Mr. Walter Johnson) and I have seen a town facing a catastrophe. Derby is the headquarters of Rolls-Royce, and a labour force of about 25,000 people are faced with massive redundancies if the RB211 project fails. There is at the moment taking place in Derby a meeting of one hundred firms of unsecured creditors who have not been paid by Rolls-Royce and who are owed sums ranging from millions to £10,000 or £12,000. Many of those firms cannot see their way to paying their bills to the end of this month, in some cases even to the end of this week. That is why my hon. Friend the Member for West Lothian (Mr. Dalyell) justifiably pressed the Minister at the beginning of the debate for some kind of assurance for these firms that they could continue trading and their bills would be met. Such assurances must be forthcoming from the Solicitor-General later.

Mr. Dalyell: When he comes.

Mr. Whitehead: Indeed.
I have come here to vote for the Bill. Like most of my hon. Friends, I would like to see this Bill amended to take in "all" the assets of Rolls-Royce and not merely use the word "any". That is now the view of most people who work for that great company. It seems ludicrous wilfully to break up the assets of this company just to have something that can be given as a sop to the more doctrinaire back-benchers opposite.
The whole of Rolls-Royce should be brought into public ownership now. Nevertheless, our first concern is to see that this Bill goes through so that in the next few days the shadow of the Receiver is lifted from Rolls-Royce, so that bills can be met, so that necessary materials for the completion of contracts can be bought in, so that all the difficulties and doubts about the payment of pension schemes, the position of workers' shares,

the claims for industrial accidents taking place in the firm even now—because it is continuing in business—may be resolved.
I very much regret that we had no assurance—indeed, no mention—of any of these doubts and worries in the speech of the Minister. It has been rightly said by several of my hon. Friends that the whole question of the value of Rolls-Royce as the receiver will find it, and the value to the country, depends largely on the future of the RB211 contract and the skilled design teams who have worked for years or this contract. Rolls-Royce is a very unusual company in that its assets cannot be quantified in simple terms of money, materials, factories or new plant. Its basic asset, apart from a reputation which has now been somewhat tarnished by this course of events, forced upon it, has been the collective skills of the design teams who have worked upon its advanced aerospace programmes.
If these design teams are broken up they are irreplaceable and the major assets of the company will be lost. It is mainly for that reason that I say to the House that the continuation of the RB211 and its renegotiation is one of the first things with which we should be concerned. The hon. Member for Epping told us that we should go into business contracting for whelk stalls and picking up tenders for Coca-Cola stands. If we have any future at all as a nation, with our tradition of aerospace technology, of advanced engineering design, that future must lie in projects like this.
We were sorry to hear the Minister of Aviation Supply say in the House on Monday that the RB211 was inferior——

Hon. Members: No.

Mr. Corfield: rose——

Mr. Whitehead: Perhaps if I read the right hon. Member's remarks it may become clear why there is such indignation not merely among the people who have worked upon the project but on many others who have its well-being at heart. The right hon. Gentleman said:
we must ask ourselves what can now be the prospect of such an engine being available in time to compete with versions of the CF6 and JT9 which are already in production and which are to all intents and purposes equal, if they do not exceed, the estimated performance of the RB2119"—[OFICIAL REPORT, 8th February, 1971; Vol. 811, c. 99.]


The right hon. Gentleman can now, if he wishes, withdraw any imputation that this engine was in any way inferior to the American engines, which I would submit are at the very end of a long and successful design run, in the case of both General Electric and Pratt and Whitney.
The Minister chooses not to answer. The RB211 is at the beginning of a 20 to 30-year development period. It is the first of a family of engines incorporating a revolutionary three-shaft design, incorporating the kind of qualitative changes for which we should be looking in the new generation of the aero-space engines.

Mr. Tebbit: This is the point I had hoped I had made—that this engine, which clearly is a most remarkable technical achievement, has nevertheless, other than the 10–11, no other airframe on which it can be hung. The point I was trying to make in my reference to the perils of going bankrupt and failing to achieve a high technology was precisely that—that it can frequently be better to aim for something within our compass and do it successfully.

Mr. Whitehead: The hon. Member must realise that the adaptation of this engine to the Lockheed 10–11 basic design is only the first stage of what is possible with this airframe company alone. Many of the Rolls-Royce technicians have assured me—and the Minister—that tests taking place upon versions of the RB211 show an achievement of thrust far greater than was originally estimated, coming very close to the long-range high-performance version which Lockheed has in view for the future. If this is true it materially alters the prospect for the sales of this engine.

Mr. Ronald Brown (Shoreditch and Finsbury): Is it not the case that the Government have taken the view, as the hon. Member has suggested, that the only thing they are fit for is selling Coca-Cola?

Mr. Whitehead: The RB211, unlike a Coca-Cola stand, can be altered, improved and fitted to various new concepts. Work is already proceeding at Rolls-Royce on another engine, a smaller one, 25,000 lb. thrust which would power a double-engine short-haul airbus jet of the future. I do not see how we can opt out of this whole range of technology, how we can turn this company back to a

repairing shop, a reconditioning shop, turning out an ever-diminishing number of Spey, Conway and Dart engines until even demand for those falls off.
With the passing of this company there is more involved than the loss of 40,000 jobs, as Mr. Nigel Lawson put it in the Evening Standard yesterday—a mere 0·2 per cent. of the employed in this country. If those 40,000 jobs are concentrated in one place, as they are in my constituency, then it is a very serious matter. However, we are talking not simply about 40,000 jobs but about the cumulative effects of what this decision might mean. We are talking about unemployment coming to perhaps a quarter of a million, directly or indirectly related to the failure of hundreds—I do not exaggerate—of small sub-contractors, firms dependent on this project and this company. That is why we should look seriously again at the prospect of renegotiation with Lockheeds.
It is true that Lockheed Aviation is a tough company. It is true that going to it and appealing for a renegotiation of the contract is like asking a stone for a blood transfusion. It is, nevertheless, true that Lockheed Aviation always treated us, and my right hon. Friend when he was Minister of Technology, with more courtesy than it has been treated over this matter. I believe that Lockheed might say that the three main American airlines which have ordered this plane are in a position to come to it and renegotiate the terms, but they will do that only if there is not a persistent denigration of the project and the prospects of this engine on the part of Her Majesty's Government.
The three American airlines concerned all know that they face three options. Firstly, they can take the engine after delays of five months, six months or perhaps nine months. Secondly, they can go to the bottom of the queue for the McDonnell Douglas DC10. That would be a longer delay. Thirdly, they can say to Lockheed, "Take a year, two years, and readapt your plane; redesign the entire airframe to accommodate either the GE6 or the GT9B." My belief is that the airlines, with the hope that we shall not again behave like a "banana republic", as my hon. Friend the Member for West Lothian (Mr. Dalyell) said earlier, and with the financial backing of


the United States, could come to us to renegotiate this deal.
This has been a sad and sorry business throughout; a number of hon. Members on both sides of the House will agree with that. The House may accept these lines of Kipling on the Boer War as an apt summary of the situation:
Let us admit it fairly as a business people should, we have had no end of a lesson and it will do us no end of good.
We have had a lesson, and we are a business people—I use that phrase in a non-capitalist sense—in that we live by the skills and ingenuity of the working people of this country, particularly those at the cutting edge of our technology, design and engineering. Our entry into Europe, if we go in, or our competitive position if we stay out depends very largely on how our technology can be sustained. We are told frequently in speeches by the Prime Minister that we must stand on our own feet and that there must be no more subsidising by the State of great enterprises. We can stand on our own feet as manufacturers of cuckoo clocks or toy soldiers without the exercise of the power of the State, but not as great enterprises of this kind.
This firm, which for many years has been the pride of this country, is now the possession of the people. I hope that it will go on to great things. I urge the Government to do all they can to ensure that it is sustained by the renegotiation as soon as possible of the RB211 contract.

7.51 p.m.

Mr. Peter Rost (Derbyshire, South-East): I regret that the debate seems to have developed into a post-mortem, for those of us who represent Rolls-Royce constituencies know that what our constituents are concerned about is not who is to blame but what is to happen today, tomorrow and in the future. Members representing Rolls-Royce constituencies cannot fail to feel deeply disturbed about the anxiety, despondency and atmosphere of despair which exists in and around Derby.
I should like to emphasise a point which I do not think has been made. The loyalty for Rolls-Royce among many people—not only employees or families connected with the company but in the

area around the Rolls-Royce concern—is deeply rooted. It is part of the life of the people, particularly in Derbyshire, and one cannot easily discard or ignore it.
I wish to give a brief example of that deep-seated loyalty. During the last war, when the Germans were trying to bomb Derby, they missed the target and one night dropped bombs on an area of glasshouses in a small town in my constituency called Melbourne, just south of Derby. The local inhabitants, many of whom were at that time and still are employees of Rolls-Royce, felt that this was such a fine opportunity to save the company, even at the risk of losing their own lives, that they decided to move themselves into nearby barns for their nights' accommodation and deliberately to encourage air raids on their own homes and the glasshouses. This was a measure of the deep-rooted loyalty which they felt about preserving Rolls-Royce.
I welcome the Bill because I regard it as a caretaker-trustee arrangement. I do not believe the Government had any alternative but to introduce it. I particularly welcome the four weeks' extension which is to be granted on work on the RB211. I want to make three pleas to the Minister and to have satisfactory answers to them before I can wholeheartedly give my support.
First, I plead desperately that we do everything we can to re-negotiate the RB211 contract. I wholeheartedly support the hon. Member for Derby, North (Mr. Whitehead). On the basis of the up-to-date information which I received from top technical people, some of whom have been in the Chamber all day today, I believe that this engine is more advanced than any other in the world; that the three-shaft principle is a major technical break-through; that the engine has developed greater qualities of silence than those of any other engine developed; that the delay in deliveries and progress on the engine have been exaggerated and that they may amount to only four to six months.
I believe that there is evidence that the production costs of the engine, once it gets under way, may be considerably less than some of the figures which have been bandied about. One quote which is worth repeating is that those involved on assembling the engine on the shop floor say that it is the easiest engine


they have had the privilege to assemble. Most important of all, evidence is beginning to accumulate that the performance is not only up to specification but is in excess of it. The evidence suggests that the thrust performance of the engine may be well above 42,000 and may be in the 45,000 range, which would put it within the category of a further development engine with relatively limited cost and time scale for development.
Secondly, I want to make a brief plea on behalf of the shareholders, particularly the loyal 10,000 shareholders who are employees of the company. They own worker shares and they have paid for them with their own savings. People have come to me over the last week with real cases of hardship among these employee shareholders. There is a special case here for consideration. The shares of the shareholder employees have been frozen since last November because the arrangement whereby they could sell finished last November. This means that they have not had the opportunity, even if they wanted it, to realise the investments, and they do not have it now.
I wish to put one thought to the House and to the Minister. If we nationalise and the company becomes prosperous, as we naturally hope it will, and we inject free enterprise capital into it again in due course, as we shall do, what will those shareholder employees think about not having the opportunity of participating in the rebirth of the company? Some special arrangement must be made for them to continue to participate as employee shareholders in the rebirth of the company.
My final plea is made on behalf of the suppliers and sub-contractors in the Derbyshire area. The hon. Member for Derby, North has reminded the House that a meeting of, he said, 100 firms is going on at this moment in Derby. I understand that the figure is 130. These are suppliers and sub-contractors who are creditors. I am convinced—and I hope that I am not alone—that the Government have a moral obligation to help. I know that many of those firms believed, rightly or wrongly, that they were in partnership with the Government and that Rolls-Royce was being backed by the Government on the RB211 project and. therefore, many of them have extended

credit to Rolls-Royce which they would not have done if they had believed it to be a purely commercial transaction.
One firm that has been left in a serious situation said:
We would not have given this sort of credit to any other organisation, other than the Bank of England.
Another firm said:
We felt that this company was safe because it was backed by the Government.
Hon. Members have spent the last four hours making just this point. The Government have an obligation. The previous Government backed the development of the engine, and therefore, it is easy to understand why many suppliers and subcontractors assume that there was a Government guarantee in the background.
These sub-contractors and suppliers not only extended more credit than they would have done on purely commercial considerations, but undertook work at much lower profit margins than in normal commercial practice, and I have evidence of that. They were given to understand that there would be a build-up of business, and, because of long-standing mutual trust and the feeling that they were participating in a national product sponsored by the Government, they extended credit beyond normal commercial practice.
For these reasons, there is a moral obligation on the Government to help to prevent the further bankruptcies and further unemployment which will result if these suppliers go down. I suggest that help could come in the form of an indemnity by the receiver in the same way as the indemnity is being offered for the continuation for the time being of work on the RB211 contract.
Evidence has come to me from one bank that credit facilities are being extended to suppliers, but the opposite appears to be happening. A squeeze is being put on simply because the suppliers are left with debts to Rolls-Royce. This squeeze is being applied also to the supplier's own suppliers and trade customers, with the result that credit is coming to a stop and, unless we take immediate action, there may be serious consequences.

Mr. Will Griffiths (Manchester, Exchange): Many of my hon. Friends are sympathetic to the objects which the hon. Member is seeking to achieve. He said


that when the company was prosperous again it might be returned to private ownership. Is there not a certain incongruity in solving the problems which he puts before us on the basis of public expenditure and then, when the firm is rescued, handing it back again to private capital?

Mr. Rost: I and my hon. Friends regard this as a caretaker, emergency operation and support it entirely. There is no alternative. We must accept the realities of the situation. The company is insolvent and this is a fact which we must accept. I am pleading for the worker-employee shareholders and for the suppliers who have helped the organisation and whose continued prosperity we shall need if we are to rebuild Rolls-Royce and the aviation industry.
In the last week I have had many meetings with my constituents and with Rolls-Royce employees. If I sum it up by saying we feel that this has been a big let-down, I am putting it modestly. Many families, after a lifetime of loyalty, are extremely concerned about their future, their livelihoods and the mortgages on their houses. The whole infrastructure of society and the area's industry, trade and commerce are in grave danger of being broken down. In supporting the Bill, I urge that the nation and the Government should accept a moral responsibility and not regard this entirely as a normal commercial liquidation transaction.

8.6 p.m.

Mr. Raphael Tuck (Watford): Like all hon. Members, I am deeply concerned at the tragic national calamity which has befallen us. I am, however, particularly concerned about the fate of Small Engines Division of Rolls-Royce at Leavesden, Watford, where 4,000 are employed. The division produces, inter alia, the 360 engine for French helicopters and the Gnome engine for many other helicopters. My constituents are worried because the division's bank credits are frozen, and the banks will not issue money unless the Government gives the go-ahead. The employees, therefore, are in suspense, for they do not know whether or not they will receive their wages, and they ask the Government to underwrite the wages bill while negotiations are going on.
My constituents also want to know about their own fate. They say that this division could be a viable, independent unit. It has been, up to now, making a profit. It was formerly the engine division of De Havilland, and probably the only part of the company that was making a profit. It went on making a profit when it became Hawker-Siddeley, then Bristol-Siddeley and later Rolls-Royce, despite bad management, for at every change—from De Havilland to Hawker-Siddeley to Bristol-Siddeley to RollsRoyce—there was a corresponding change in procedures, in specifications, and in paper work generally. There were too many changes at once, and more managerial staff began to make the whole concern top heavy. There were managers, assistant managers and assistants to assistant managers, all injected in the last two years. There are too many non-producers in this Rolls-Royce division. With good management, the division could make a bigger profit than it is making now with bad management.
There are about 500 technicians on the staff, and the technicians' union would like to be listened to and wants to point out the weaknesses that exist. The unions want to contribute towards strengthening the organisation, which at present is weak. They would be happy to do this, because something must be wrong. After all, the Americans are paying three to four times a s much per hour on labour as we are, and we should therefore be able to undercut them, but we do not. They succeed where we fail. What is the reason for this? I know that hidden subsidies and protected markets play their part, but the important factor is managerial expertise in the United States, and this we have not got. We must get ourselves better organised.
If Rolls-Royce and this division are allowed to sink, there will be violent repercussions elsewhere. For every tool designer in the Rolls-Royce Small Engines Division, Leavesden, there are about two working in other companies. These are the companies which are making a profit. Therefore, they are contributing to the national welfare. They have sub-contractors of all kinds making instruments and manufacturing parts. There are forging firms, casting firms, and a host of others linked with Rolls-Royce and the Small Engines Division.


From the point of view of the nation, Rolls-Royce is a vital national interest quite apart from its prestige value. Therefore, in my view and in the view of many of my hon. Friends, it is only right that at this stage the Government should take it over. But it should not be spread around with parts of it being given to private enterprise. The whole community has an interest in its survival and it should therefore be taken over lock, stock and barrel.
We should not drop the RB211. Let us act like men and honestly and openly approach Lockheed to find out whether it is possible to re-negotiate the contract, instead of playing Lockheed a shabby trick by wriggling out through what is merely a legal loophole. And once it is taken over by the Government and made into a healthy and viable organisation with public money, I repeat, with the taxpayers' money—let us not hear anything about turning over the organisation to private enterprise. First of all, that would be stealing public money—and as such, it would be a criminal act. Secondly, it would also be self-defeating.
Private enterprise as failed once. If Rolls-Royce is turned back to private enterprise, why should it not fail again? Let the Government remember the lesson of S. G. Brown, Watford. That company was making a good profit until it was turned over to private enterprise in 1959. Thereafter, it made loss after loss until it fizzled out a short while ago. Let the Government show their mettle, for once in a while, if they have any. I hope that I shall receive answers to the two questions I put to the Minister.

8.12 p.m.

Mr. Cranley Onslow (Woking): I shall be brief. I speak with a powerful constituency interest since many B.A.C. workers live in my constituency and the constituency contains many sub-contractors engaged on Rolls-Royce work. I also speak as someone who has watched this crisis develop with some sense of inevitability over the years.
I do not want there to be any misunderstanding about my opinion. I regard this situation as being industrially the equivalent of the fall of Singapore. Nothing will ever be quite the same again and we shall bear the scars long after the wounds have healed. We shall, of

course, survive this situation, but we shall always be left with a sense of incredulity as we discover more and more of the reasons, and see what elementary mistakes were made and perpetuated by the men who took the original decisions from which these tragic consequences inexorably flow.
I shall say a little about that matter in due course because I regard this as stemming wholly and totally from events which took place in the lifetime of the Labour Government, specifically in the Spring of 1968. I hope that if my hon. Friend the Member for Hastings (Mr. Warren) has the opportunity to address the House, he will be able to contribute some evidence on the industrial side which the House has not yet in its possession.
I should like to say one general thing before I make any attempt to attribute blame. I do not go any way with those who believe that the fortunes of Rolls-Royce are so unimportant to the future of the country that it does not matter into whose hands that company falls. I support the Bill as a desperate Measure to be taken in a desperate situation. I entirely disagree with those who say that what happens now does not matter, and would be content that Rolls-Royce should be bought by the Kamikaze Aircraft Corporation if it comes forward with the biggest amount of ready cash.
What has happened should also mark the end of launching aid. We must, of course, look to the future, and we must now develop some new forms of partnership between entrepreneurs, technologists and financiers. We must work in joint ventures as between public and private industries and as between British and European industry. This must be one of our main preoccupations in the months ahead. For the rest, I endorse the Bill to the full, and I wish my right hon. Friend all success in carrying it through.
I must now turn to the responsibility of the right hon. Member for Bristol, South-East (Mr. Benn); and I am sorry that he is not now in the Chamber. On previous occasions I have had hard things to say about him when he was a Minister. He went through the painful experience of the collapse of Beagle Aircraft. I believe that he bore heavy responsibility for that collapse, but I believe that in this matter his responsibility is 20 times


heavier. I have studied the statement he made to the House on 1st April, 1968, his speech on 23rd November last year, and his speech last Monday, and nowhere do I find any evidence that my view is wrong.
The right hon. Gentleman will have to answer certain questions. Did he encourage the contract? The right hon. Member for Wednesbury (Mr. Stone-house) said he did. Anybody who looks at columns 39–42 of HANSARD on 23rd November will see there the encouragement offered by the right hon. Gentleman to these activities. There are details of the special and extraordinary help given to the company. Moreover, anybody who remembers the background to the negotiations on the European airbus will know how our European partners were convinced that one reason why the British Government would not put their heart into that project was that all their heart and weight was in the RB211 deal with the United States.

Mr. Heffer: The hon. Member is blaming everyone but himself.

Mr. Onslow: If it could be shown that I was to blame, I would accept the blame. I wish the same could be said of hon. Members opposite.

Mr. Raphael Tuck: The Conservatives supported it wholeheartedly.

Mr. Onslow: That is not true, and if the hon Gentleman had been listening he would know it. Did the right hon. Member for Bristol, South-East ever envisage and investigate the possibility of failure? He told the House that he was confident and thought his confidence was well founded. It is worth reminding the House that he also said that Rolls-Royce understood the consequences of this contract. The Government had discussed all this with Rolls-Royce, and that company was in no doubt about them. By the same token, if the discussion was a full one then the Government, too, should have been in no doubt what was at stake.
I would refer the House to what the right hon. Gentleman said on 8th February. He said that Rolls-Royce and Lockheed
clearly understood what was at stake in launching the aircraft under those conditions, because we had discussed that with them

beforehand."—[OFFICIAL REPORT, 8th February, 1971; Vol. 811, c. 64.]
Should not the right hon. Gentleman, who was the responsible Minister, also have known that there was reason to be doubtful about the calculations of Rolls-Royce. He told the House in column 66 of HANSARD of 8th February that the Government had. no expertise to check these calculations. But we know he had evidence that should have made him doubtful about these calculations. He knew of the escalation that had gone on with the Olympus contract, and also of the escalation in regard to the Spey engines for the Phantom.
We should bear in mind the comments of the Public Accounts Committee in its report for 1967–68, and the right hon. Gentleman, or certainly his Department, should have known what the findings were likely to be even if their actual publication post-dates the underwriting of the RB211 contract. The Public Accounts Committee said in paragraph (59) on page xxix:
Your Committee have no wish to question the decision to continue with the Spey-engined Phantom … but they regret that the earlier decisions, and in particular that made in 1965, to purchase the United Kingdom versions should have had to be made on the basis of totally unreliable estimates and before the costed technical programme for the engine was received.

Mr. Dan Jones (Burnley): rose—

Mr. Onslow: I am not giving way.

Mr. Jones: The hon. Gentleman should not make statements like that.

Mr. Onslow: My hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) reminded us that there has been no shortage in recent years of evidence to indicate that financial calculations made by aerospace companies, must be suspect until all the costing has been gone through.
The fact that the right hon. Member for Bristol, South-East, who underwrote the contract and made the announcement to the House on 1st April, 1968, did not actually see the contract between Rolls-Royce and the Lockheed Corporation until August that year is a condemning indictment of his responsibility. The right hon. Gentleman committed this country, Rolls-Royce, the jobs, the savings, the reputation, and all that goes with it, to


what was, in effect, a monster gamble. [Interruption.] I hold no brief for the management, but the Minister was in to the tune of £47 million. Is that nothing?
I dare say that the right hon. Gentleman in his own defence would remind the House of what he said on 16th April, 1969, when he told us that he was not prepared to find money for the A300B. The right hon. Gentleman said:
I have always made the Government's view quite clear that if a firm comes to us with a proposition we will evaluate it, but that it is not for the Government to tell firms what to produce or how to do it, because then we would get into the most unfavourable position of all when the firms come later and say, 'we are building this project only because you asked us to. Now, will you bail us out?' That would be utterly destructive and unsound investment in advanced technology."—[OFFICIAL REPORT, 16th April, 1969; Vol. 781, c. 1127.]
That was when the alarm bells were beginning to ring and it was becoming clear that things were going wrong at Rolls-Royce. If the attitude of the right hon. Gentleman had really been that in April, 1968, we should have been spared disaster now. The right hon. Gentleman bears a heavy burden of blame. I hope that he will accept it with humility and own it to the House.

8.22 p.m.

Mr. Maurice Edelman: The hon. Member for Woking (Mr. Onslow) has made a most lamentable partisan speech in a desperate and tragic situation.
I shall go into the Lobby in support of the Bill with a heavy heart, not only because of the disaster which the country has suffered by reason of the Rolls-Royce crash, but because, instead of nationalisation being a constructive action on behalf of the country, we are to entrust the nationalisation of this great industry to those who have no faith or belief in nationalisation and who will in the end, I am sure, ultimately seek to sabotage the mechanism of nationalisation. Therefore, it is with great reluctance that I shall support the Bill.
Last November—a date which I shall show later to be extremely significant—together with a large number of my hon. Friends I put down a Motion calling for the nationalisation of Rolls-Royce in the interests of efficiency and public accountability. If the debate has any theme, it

should be that of public accountability not only for the past but for the future as well. If we are to put this industry in the hands of those same people, whom the hon. Member for Woking did not mention, who, as financial controllers, failed the industry and the country, then indeed, in the absence of public accountability, we are merely laying the ground for new disasters and for the downfall of the aircraft industry.
I believe that for our future guidance it is necessary to examine the causes of the Rolls-Royce bankruptcy and the process by which this great company was brought to its knees. The only way that can be done is by a Motion calling for a Select Committee to inquire into all the stages by which this disaster occurred.
I agree with one thing in the speech of the hon. Member for Woking. This is indeed our Singapore. One of the great bastions of the country has fallen. To allow it to happen as if nothing had occurred, merely to try to sweep under the carpet something the reverberations of which will probably last to the end of this century, would be to fail in the task before us. I hope, for a start, that a Select Committee will be set up to inquire into what went wrong.

Mr. Michael McNair-Wilson (Waltham-stow, East): Does the hon. Gentleman agree that it is a great pity that the report of the I.R.C. has never been made available to this House so that hon. Members might have had a chance so many months ago to have some idea of the disaster which lay ahead?

Mr. Edelman: I agree. I believe that that report should have been published so that we could have added data on which to come to a conclusion. We have not got the material on which to form a firm judgment and decide who are the guilty men and where responsibility lies. I say this in no spirit of acrimony. I do not wish to condemn anybody for the sake of condemnation. This matter affects the destiny of the whole country. Therefore, I believe that a Select Committee should be set up to find where responsibility lies.
I must speak about the RB211 and the contract. I regard the RB211 as potentially a great engine. I declare my admiration of the skill of the Rolls-Royce


workers in Coventry, many of whom I have known for 25 years, but we cannot disregard the nature of the contract. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) made clear in the debate in November that there were questions which could and should be asked about the nature of the contract.
Was a fixed price contract a good thing? Was it desirable to enter into a contract using an inadequately tested material, the carbon fibre, the costs of which were unknown? Was it a good thing to enter into a fixed price contract of that kind at a time of escalating costs, the outcome of which could never be known?
The hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd) was right to draw attention to the fact that in the United States there had been a massive escalation in the costs of aircraft. That has certainly happened. That should have been a reason for not entering into a fixed price contract, whose outcome could only be disaster.
The hon. Gentleman attacked my right hon. and hon. Friends for neglect and for their shortcomings, but he said nothing about the shortcomings of those in financial control of the company. That is one of the fundamental reasons for the collapse. Consider, for example, the history of a firm taken over by Rolls-Royce—Bristol Siddeley—which nobody has so far mentioned in this debate or in the emergency debate of last Monday. That company not only over-charged, but hung on to the over-payment for a long time. I do not know whether the money has been repaid, but that company certainly used the Exchequer as a kind of mulch cow. It used public subsidies in ways which were never publicly accounted for. That is why I believe we are today holding an inquest on what happened with Rolls-Royce.
Rolls-Royce slid into a humiliating bankruptcy. Why did right hon. Gentlemen opposite find it necessary to permit a bankruptcy of that kind?
I said before that last November was a critical date, and present tonight are hon. Members who will recall some of the speeches made in that debate. They may recall my speech in which I spoke about the need to renegotiate the con-

tract for the RB211 on the ground that it was a contract which was misconceived in the circumstances of our time and could only lead to financial disaster. I said then:
… just to continue blindly perservering with the RB211 in a kind of vacuum without direct contact or relationship with the United States is something which is bound to lead to increasing loss, and … to increasing demands for subsidies from Her Majesty's Government." —[OFFICIAL REPORT, 23rd November, 1970; Vol. 807, c. 75.]
To that submission the Minister of Aviation replied that renegotiation would be "devastatingly expensive".
Four months ago it might have been possible to renegotiate that contract in dignity and honour, but instead the Government permitted this catastrophic movement towards the abyss—the bankruptcy of the company, the losses to many shareholders—the unhappiness of so many workers and, indeed, the dishonour which our country is facing.
It is true that the contract was a crippling burden for the company. It was crippling to the extent that, it would have to be supported by the injection of colossal sums of public money, equivalent perhaps to at least one-tenth of our national reserves. What has astonished not only Britain but the whole world, our friends as well as those who are hostile to us, is that without any warning, almost overnight, the Government permitted this great company to go into an irreversible bankruptcy. What has happened is indeed irreversible. Tonight we are engaged in a salvage operation, not in a productive reconstruction.
Today we are dealing with a salvage operation, an operation which has begun under the curious mystique of the receiver. One of the most degrading aspects of the situation is that for simple purposes it is necessary for the Minister to go to the Receiver for permission to spend, literally, a penny. I have great sympathy with the Minister in his difficulties. Only the other day I told him that a Rolls-Royce factory at Parkside in Coventry was being kept minimally above the heating level permitted by the Factories Acts, and that that was being done in the interests of economy. I asked the Minister to take steps to ensure that the factory was properly heated so that the morale there, already at a low ebb, could be maintained in proper conditions


of warmth so that men could work with as much enthusiasm as they could command. The Minister said that he would do something about it. He said that he would talk to the receiver as soon as possible. I say that not flippantly, not as a laughing matter, but to illustrate the humiliation that we are facing today.
I should like to touch briefly on some of the magic incantations being used by hon. Members, especially those on the opposite side of the House. One of the chief incantations is the phrase European integration. I have always been strongly in favour of the Concorde aircraft, and of co-operating with France and other countries on the Continent in a system of functional co-operation, but this idea of having a joint engine company with S.N.E.C.M.A., an integrated company, is one which I oppose and reject, and I shall explain why.
I oppose and reject it because it has been the constant endeavour of many countries abroad to seek, in these enterprises, to milk British technology, to draw from it the maximum benefit, and to make the minimum of contribution. If we entered into joint European companies—companies, incidentally, which have no legal or formal status—the next thing that would happen especially if these companies were concerned primarily with defence, that we would no longer be in command of our own defence policy. We would no longer be in command even of our defence sales. We would no longer be in control of, for example, the sale of arms to South Africa, to the Middle East or to the Soviet Union. If we were to enter these integrated companies, we would lose our freedom of manœuvre, and the very purpose for which the Bill is introduced tonight, to maintain our defence capability, would thereby be limited. I hope that hon. Gentlemen opposite will not advance that idea as some sort of panacea which will cure our ills, and something which will get us off the hook. I am sure that it will not.
There are many sad people, and families, waiting for the outcome of this debate. Whatever we do, we must not give people false hopes, for there will be a day of reckoning and retribution. I reject the idea of European companies, as a passing thought to redeem the situation. I reject even the idea that the RB211 in the present situation, can be saved

simply by our saying that we will save it. Let us not get "hooked" on that one, because we must reckon with our hosts, who are the United States administration, the Lockheed Corporation and so on.
It is not just a matter of our having the will to go ahead with the RB211. We must urge the Government, I hope unitedly, to renegotiate the contract. I know that that phrase, which trips lightly off the tongue, could easily become a catch phrase, but I do not believe that Lockheed itself wants the project to collapse. Of course, in the heat of debate, people say foolish things, and the Minister of Aviation Supply said something foolish the other day when he appeared —I put it no more strongly—to undervalue the RB211. We now have a common purpose, which must be to affirm that the RB211 is a good engine.
We have some of the most enthusiastic and dedicated workers in the world. I say this not out of any interest in constituency flattery but because that is my experience. Time after time, shop stewards from Coventry Rolls-Royce and Bristol-Siddeley have come to see me. The purpose of their visits has never been to obtain more money or to threaten a strike. It has always been because they have been afraid that some aspect of the aircraft industry would collapse and leave them out of work. They have sought to work. Our duty tonight is to provide them with the means of restoring the greatness of Rolls-Royce and, through it, the greatness of our country.
I have already charged hon. Gentlemen opposite with not having their hearts in the idea of nationalisation, and for one reason above all—that there cannot be true nationalisation, in a Socialist sense, without participation. Today, we have seen the participation of the workers at Rolls-Royce. They have come here to make their case, to ask to play their part in their industry and to seek the opportunity to restore Rolls-Royce to its former greatness. I hope that the House will give them support and encouragement in order to do so.

Mr. Dalyell: On a point of order. Three and a half hours ago we were promised the Solicitor-General would intervene and there was an indication that hon. Members would have the opportunity to question him on this vital issue on which only he, apparently, can pass


any judgment. I have twice been to the office of the Lord President. On each occasion we have been told that he was just coming. I hope that he is coming very soon.

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Further to that point of order. The Solicitor-General is walking into the Chamber and will now deal with the point.

8.39 p.m.

The Solicitor-General (Sir Geoffrey Howe): It is not often, Mr. Speaker, that I am fortunate enough to catch your eye quite so quickly after my arrival in the House.
My right hon. and learned Friend the Attorney-General would, of course, have liked to be able to explain the position to the House on this matter himself, but, as the House knows, he is and has been for some days unwell.

Mr. Dan Jones (Burnley): I hope he will soon be better.

The Solicitor-General: I will convey the hon. Member's sentiments to my right hon. and learned Friend.
As the House will appreciate, I have not had the advantage of hearing what has taken place in this debate so far, but I will do my best to help the House with an explanation of the legal position.
The anxiety about which I have been asked to say something arises on the position of those who have been supplying Rolls-Royce, in light of the collapse of the company and, in particular, in light of the provisions of Section 332 of the Companies Act. Obviously I cannot be expected to deal, and it would not be right for me to deal, with the varied positions that could arise in respect of particular suppliers, because those will depend upon a consideration of the facts in each case. Obviously they will depend in each case upon the overall position of each of those suppliers and upon the scale and nature of their involvement with Rolls-Royce.
These are the words in which my right hon. Friend described to the House how the position arose:
As the Board of Rolls-Royce have stated, the loss of resources already committed to the project combined with the losses which will arise on termination are on such a scale that

they are likely to exceed the net tangible assets of the company. In the light of this situation the board have decided that they have no alternative but to ask the trustees of the debenture holders to appoint a Receiver and Manager."—[OFFICIAL REPORT, 4th February, 1971; Vol. 810, c. 1922.]
At that point the board was itself complying with the provisions, in effect, of Section 332 of the Companies Act. The substance of that is that a person may not carry on the business of a company, nor be party to its carrying on business, with knowledge that there is no reasonable prospect of its creditors being paid. That identifies and defines the problem which is now said to face the Rolls-Royce suppliers.

Mr. Barnett: Obviously the Solicitor-General would not want deliberately to mislead the House, but he did not use the words in Section 332. The relevant words are "with intent to defraud". Clearly not within the realms of imagination could it be said that the directors and the Government, if they had attempted to carry on, were intending to defraud the creditors. Indeed, it would be the very reverse—they would be attempting, in the best possible way, to ensure that the creditors would be paid in full, whereas now the sub-contractors and the creditors clearly will not be paid in full.

The Solicitor-General: The words that the hon. Gentleman quotes from the Section are right, but the case law on the point—I hope the House will forgive me for not having all of it accumulated about me at the moment—is to the effect that one must apply the judgment of ordinary commercial men to such a situation. If the directors of a company know that they are carrying on business with no reasonable prospect of the creditors being paid, that is the test as to whether or not the intent to defraud is fulfilled.

Several Hon. Members: rose——

The Solicitor-General: I must get on.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. I should like the House to realise that I will, when the learned Solicitor-General has finished his statement, be prepared to allow a certain number of questions to him. It will probably be in the best interests of the whole House if the hon. and learned Gentleman is allowed to continue his


statement and then I will do my best afterwards to satisfy as many hon. Members as I can, consistent with the orderliness of debate and the proper finishing of the debate, because we have much to do before the night is out.

The Solicitor-General: I shall try to steer a middle course between insisting on completing what I have to say and giving way to interventions which are to the point. I gladly give way to the hon. Member for Ashton-under-Lyne (Mr. Sheldon).

Mr. Sheldon: The whole question of intent to defraud could have been established only if the company had made serious efforts to renegotiate the contract with or without the Government's assistance. As this was not done, how could anybody claim that there was intent to defraud?

The Solicitor-General: I do not follow how that is put. If the board came to the view, which they did, as my right hon. Friend stated, that there was no reasonable prospect of their creditors being paid, and in the course of arriving at that view they have to take many factors into consideration——

Mr. Millan: rose——

The Solicitor-General: I cannot give way too often, otherwise we shall not make progress. I am seeking to confine myself to a statement of the principles that apply in the first instance. The position of the suppliers, in the situation now existing, is the same as that which faces any suppliers of a company that ceases business or collapses and finds its affairs in the hands of a receiver or liquidator. Each of the suppliers, according to the test which I have tried to formulate, has to ask himself, amongst other things, the questions which arise under Section 332. That is why it is plainly not possible or right for me to generalise about the position of suppliers in this case.
The House will accept that it would be quite wrong for me to try to advise, from where I now stand, over a wide range of different problems. The question is, do they know, as and if they trade, that there is no reasonable prospect of their creditors being paid? That is a question which faces companies in many situations apart from this one. For many such

suppliers, the degree of their involvement with Rolls-Royce will obviously be so small in relation to the whole of their business that——

Mr. Dalyell: No, no.

The Solicitor-General: I am not seeking to over-generalise or over-state the position, but it must be plain talking in these terms that there must be many or some people—the House may choose the word—who are supplying Rolls-Royce like any other company, for whom the scale of their business relationship with Rolls-Royce is so small in comparison with the rest of their business——

Mr. Dan Jones: Is the Solicitor-General aware that firms in Burnley are involved to the extent of £7 million?

The Solicitor-General: That is why I used the words that I did. I have tried to choose my words reasonably. I used the words "some or many". I know that the hon. Gentleman's interest is serious and genuine. It would be wrong for me to try here and now to advise about the position of any given company or supplier. If one looks at the position of those who may be involved in this way, it depends in the first instance obviously on their overall financial and trading position, and, as I have said, on the scale and degree of their involvement with Rolls-Royce. It may depend, in any given case, on the extent to which any payments are outstanding to them from Rolls-Royce. I have no detailed information about that in respect of any given supplier, but for reasons which I shall try to explain, I doubt if there are any in the present uncertainty of whom it could now be said that they must know, as a result of what has happened to Rolls-Royce, that there are no reasonable prospects of their creditors being paid. Their position arises in this way, as it would in relation to any company whose assets have been placed in the hands of a receiver.
When the assets of a company are placed in the hands of a Receiver by secured creditors, as has happened in this case, the Receiver is obliged to protect the interests of the preferential and the secured creditors, in this case the debenture holders. He must do that by preserving and realising the assets of the company to the best advantage. He is


not bound by any pre-existing contracts, and parties to any such pre-existing contracts which he does not continue are able instead to claim damages against the company and, in respect of those damages, to rank as unsecured creditors in the winding up. That means that the Receiver is under no legal liability to pay such unsecured creditors in respect of existing debts, and the value of their claims will depend upon how much is available after the secured and preferential creditors have been paid. How much then will be left for unsecured creditors in that way will depend on how much the Receiver is able to obtain for the assets.

Mr. Dan Jones: What is he likely to pay?

The Solicitor-General: I cannot in this case, any more than in any other, give a definitive reply. I cannot even speculate about that. But the Receiver is under a duty to realise those assets as advantageously as possible. For that purpose, he is continuing the activities with a view, wherever possible, to disposing of them as going concerns. Any liabilities that he incurs for that purpose, for example, in respect of current suppliers, he is obliged to meet. Such current suppliers take priority over preferential and secured creditors.
I have tried to set out the general principles affecting the position of the Receiver and affecting the suppliers in the situation that now exists. The position of individual suppliers will have to depend upon a consideration of the facts in each case.
Now, if I may, I will try to answer questions within the limits that they are put to me.

Mr. Benn: I am sure that the whole House is grateful to the Solicitor-General for coming into the debate without having heard it and trying to help us. He will appreciate that his statement is a very general one. The fact is that his right hon. Friend the Minister of Aviation Supply announced in introducing the Bill an entirely new element, which I welcomed. It is that money is to be paid to keep the RB211 going for four weeks. In view of that, the hon. and learned Gentleman cannot be right when he says that a creditor of Rolls-Royce is

in the same position as if the company of which he was a creditor had gone bankrupt without Government intervention.

Mr. Deputy Speaker: Order. I hesitate to interrupt the right hon. Gentleman——

Mr. Benn: I am asking a question.

Mr. Deputy Speaker: It must be a question. The House wants to get on with the debate.

Mr. Benn: I have to explain my point. The Solicitor-General did not hear his right hon. Friend's speech. The hon. and learned Gentleman said that creditors are in the same position as they would be in any other bankruptcy. However, since the Government have intervened to say that at least for four weeks they will preserve a flicker of hope for the RB211, does that of itself constitute for the creditors grounds for believing that there is a reasonable prospect that if they carry on they will not fall foul of the Companies Act?
The second point which arose in the debate and to which the hon. and learned Gentleman made no reference is whether, in American law, Rolls-Royce's assets in the United States are likely to fall forfeit to Lockheed so as to alter the situation as we understand it. Did the hon. and learned Gentleman advise the Cabinet on that matter?

The Solicitor-General: Dealing with the last point first, the required range of knowledge of the Solicitor-General is ample, but I am afraid that it does not extend to the position under New York law—[Interruption.]

Mr Benn: rose——

The Solicitor-General: If I may continue, I understand hon. Members would wish me to say something further on that, but I would hope they understand the circumstances under which I rise to intervene in this debate.

Hon. Members: What is the Solicitor-General here for?

Mr Benn: rose——

The Solicitor-General: Perhaps I may deal with the second point put to me by the right hon. Gentleman. The position of the Receiver is precisely the position in which a receiver would find himself who had been appointed in the same way in


respect of any other company that had been obliged to make the announcement Rolls-Royce made on 4th February, and his liabilities are as I explained them.
One of the matters which is within the range of assets of which he has to try to dispose is in relation to the aircraft activities of Rolls-Royce as to anything else; and he is, within the limits of the statement made by my right hon. Friend this afternoon, able to continue those activities. But the fact that he is doing that which enables him, perhaps, to preserve more effectively the assets of which he may dispose, as he disposes of them in the course of his duties, does not in law make any difference to his liabilities, rights or obligations in respect of preexisting debts which he is entitled to avoid under the provisions of the Companies Act; and that fact makes no difference.
He might have been able for a whole range of reasons, and indeed may be doing so, to continue the activities of the company with a view to their more profitable disposal, because obviously in the interests of everyone he disposes of them as advantageously as he can and is entitled to seek such help as he can to do so. But the fact that he does so to the advantage of everybody does not affect his obligations in respect of pre-existing debts.

Mr. Benn: To clarify this point, nobody asked the Solicitor-General to advise the House on American law. I want to know whether the Cabinet was advised on American law at the time they decided. Secondly, is the re-entry of Government money into the bankrupt company not a new factor which creditors could take into account?

The Solicitor-General: On the last point, again, the re-entry of Government money does not, in the way my right hon. Friend has defined it, affect the position. I have tried to deal with the reasonable prospect as it affects the position, and if hon. Members will allow me I will answer questions as they are put. The re-entry of Government money is one of the factors relating to the future of the Rolls-Royce undertaking and what may emerge therefrom which suppliers are entitled to take into account. But the re-entry of Government money is limited to that which was stated by my right hon. Friend

today; and to that extent and end it is a factor to be taken into account. [Interruption.] To that extent, if I may return to a point I made for the assistance of the House and of people outside, I would say on the present position, although I cannot possibly be expected to give blanket advice or a blanket undertaking, it would be surprising if any supplier was obliged as a result of what has happened in relation to Rolls-Royce to conclude that by reason of that he was faced with a situation in which he had no reasonable prospect of paying his creditors. It is for that reason I cannot go beyond that. I have given my advice in answer to the House to the limit of my ability.
As regards American law, the party to the contract was the Rolls-Royce company, and one must assume that it was advised about its position when it reached the conclusion which it announced on 4th February.

Mr. Millan: On the issue of the position of the directors of Rolls-Royce under Section 332, is it not clear that the only basis on which the board could have decided that there was no reasonable prospect of paying their creditors was that the Government had informed them that, in the light of the changed financial circumstances, the £60 million aid promised last November was being withdrawn and, what is more, the Government would not help the board to renegotiate the RB211 contract? Does it not follow that it was the attitude of the Government which forced Rolls-Royce into the hands of the Receiver?

The Solicitor-General: The board of Rolls-Royce were parties to a contract, about which the House knows, in respect of which they were in a position to receive, and did receive, their own legal advice, apart from the other advice which was available to them. The directors of Rolls-Royce had to assess how they stood in relation to that contract and in relation to all their other creditors, debtors, assets and liabilities. It was upon that assessment that the directors of Rolls-Royce took the decision which they announced on 4th February.

Mr. Barnett: The important point here is that there are many sub-contractors now in the same position as the board of Rolls-Royce in relation to


Section 332. At the time when the directors of Rolls-Royce decided that they had to call in the Receiver, they knew that at least some 12 months earlier in the last balance sheet net tangible assets stood at about £200 million, plus property valued at about £18 million.
With respect, all these sub-contractors are not being helped by the Solicitor-General tonight. Tomorrow, they will face wage bills and other bills. They have outstanding debts from Rolls-Royce. They have to make a decision, as the Solicitor-General said, on whether there is a reasonable chance of their being paid. Nothing in what the hon. and learned Gentleman or the Minister said can make them feel that there is a reasonable chance of being paid. In those circumstances, what the Solicitor-General is saying, in effect, to all these hundreds of sub-contractors——

Mr. Deputy Speaker: Order. Will the hon. Gentleman—[HON. MEMBERS: "No."] I am sure the House realises that I am only trying to help it. To help me in calling other hon. Members to speak, will the hon. Gentleman come as soon as possible to his question?

Mr. Barnett: I had some difficulty in hearing what you said, Mr. Deputy Speaker, but, with respect, we have all night if need be.
These sub-contractors are now placed in the same position as Rolls-Royce are said to be by the Solicitor-General and the Minister under Section 332. I do not accept the Solicitor-General's interpretation on Section 332, but what he has said means that hundreds of sub-contractors will, very likely tomorrow, have to take a decision in the same way as Rolls-Royce did. The responsibility rests on the Government to make a political decision. This is what it amounts to—[HON. MEMBERS: "Hear, hear."]—a political decision to say that they will pay an adequate price to the Receiver for the assets, on going market rates, not break-up value, in such a way as to pay the creditors in full. If they do not say that tonight, they will be responsible. They will be responsible for thousands of people being unemployed.

The Solicitor-General: The position of Rolls-Royce as it faced the company on

4th February was precise and distinct. It was in a position to make an assessment of its own position in the light of its assessment in face of a particular contract, and the facts and factors which faced it were clear. The company formed its own judgment as to what conclusion it should reach, and it announced it, in the light of Section 332.
The position of the suppliers, with which I have tried to deal, has to be looked at quite distinctly and separately in the case of each of them. One of the factors, certainly, as I have tried to explain, is the extent of their previous commitment to or involvement with Rolls-Royce. But there are also the factors implicitly and explicitly referred to by the hon. Gentleman, namely the extent to which the receiver secures the most advantageous terms for the disposal of the assets. As I told the House before, in my judgment, though I cannot deal with every case and would not seek to do so, the present position is not such that any supplier need reach any conclusion adversely. The hon. Gentleman takes a different view. I have tried to enunciate the test which applies. It is for each supplier to face it in that situation.
What does seem to be clear is that the uncertainty about the future of Rolls-Royce, and about what the Receiver can take into account in assessing the prospects as he discharges his duty, will surely be abbreviated by an early conclusion of the debate about the matters before the House. There can be no dispute about that.

Sir Harmar Nicholls: Is my hon. and learned Friend aware that both sides of the House are genuinely disturbed about the position that many sub-contractors will find themselves in? But will he take it that those of us who are concerned think that some of the questions so far have been irresponsible? [HON. MEMBERS: "Oh."] His statement that the sub-contractors need not take the words he has used as being adverse to the possibilities of their getting their recompense should be underlined. Can I take it from him that the fact that we are prepared to finance the four-week investigating period means that the Government, as far as political leanings come into the matter, will do their utmost


to keep the major part of Rolls-Royce as a going concern? Does not my hon. and learned Friend think that that is the best way in the long term of helping the sub-contractors?

The Solicitor-General: Of course one is aware, speaking on this matter, as indeed one would be speaking here or anywhere else, about the position of suppliers of a company that has this fate overtake it, of the difficulties that must face them. I entirely share my hon. Friend's sympathy for the suppliers. I have said what I have tried to say about the position of those companies, and I say it subject only to the point that I cannot express a concluded opinion in respect of any one of them.
My hon. Friend asks me about the extent to which a Government decision affects the position of the suppliers. All that I can say about that in the context of the present discussion is that it is plainly to the advantage of the suppliers, as it is to the advantage of everyone else, that the Receiver should be able to dispose of the company's assets as advantageously as possible.

Mr. William Rodgers: May I take the Solicitor-General back to an earlier question about American law? I am sure that he will not be satisfied with his statement that he is not competent to give a view, because he must have advised the Government on a matter which affects the negotiations with Lockheed. Is it not the case that in the event of a failure to renegotiate the contract with Lockheeds an action in the American courts would mean that the whole of Rolls-Royce's exports to the United States, including the exports of any company which was the heir to the present Rolls-Royce company, would be subject to sequestration by the American courts, in the absence of a renegotiated contract and a settlement of the legal difference of opinion?

The Solicitor-General: The contract was made by the Rolls-Royce company. The question of the proper law of contract and matters of that sort would be a matter for that company and in respect of which it will no doubt itself have advice. I cannot advise the hon. Gentleman on the effect of the proposition he

puts about any contracts entered into by any new company which may continue any or all Rolls-Royce's activities.

Mr. Leslie Huckfield: Can I revert to the question of the sub-contractors? I am sure that 1 speak on behalf of many hon. Members on both sides. Many of us have in our constituencies sub-contractors the bulk of whose work is for Rolls-Royce, but not only on the RB211. These people have still not been paid. They have been going round all this week trying to get in money, trying to get credit elsewhere. They cannot get additional credit from the banks. They were acting in many cases on the understanding that the Government were already guaranteeing the additional £42 million to Rolls-Royce, and it was on that kind of understanding that they took on additional work for Rolls-Royce. They feel that the Government have a moral responsibility to guarantee the undertakings they have given to Rolls-Royce. What are the Government going to do about it?

The Solicitor-General: The hon. Gentleman has talked about the commitment of the Government in respect of £42 million, which was of course not related, so far as it went, to the matters about which he asks—namely, suppliers undertaking activities that, as he said, were unconnected with the RB211 activities. If one takes the position that the receiver is concerned to secure the most advantageous return on the assets of the company, including those which are unconnected with the RB211 and whose profitability and prospects are, therefore, quite different, then the relationship of the suppliers with those activities can be judged by reference to the likely future of those activities, which are quite distinct. One of the matters affecting the prospects of the company over all must be the extent to which the receiver is able to maximise to the greatest advantage the assets of the company. One of the factors in that is this legislation.

Several Hon. Members: rose——

Mr. Speaker: Order. If we could get back to the debate, there would be time for one short speech before the right hon. Member for Bristol, South-East (Mr. Benn) speaks.

Mr. Denis Howell (Birmingham, Small Heath): Is it not clear that the House has been put in a monstrous position? Is it not the case that we have wasted most of the debate because of the incompetence of the Minister of Aviation Supply in his opening speech in being unable to answer any of the quesitons of policy? Is it not clear, with every moment that passes, that it is not the Solicitor-General that we want to hear, grateful to him as we are for coming? The position is that after the opening speech, which raised very serious legal questions about the American situation and American law and about the position of sub-contractors and so on, we were bought off from our questioning by the statement that the Solicitor-General would make a statement later? His statement has proved totally inadequate to deal with the very real questions that we have. Is it not clear that the whole of this matter comes down to a political decision taken by the Government in respect of the Bill? Will the Solicitor-General advise the House whether, before we knew even the name of the Receiver, it was intended to sell off the Rolls-Royce motor car division as a separate entity? Will he tell us what advice in that situation he offered to the Government, as the Bill has serious implications in American law, about such a course taking place?

Several Hon. Members: Several Hon. Members rose——

Hon. Members: Answer.

Mr. Speaker: Mr. Sheldon.

Several Hon. Members: Several Hon. Members rose——

Mr. Speaker: Order. I called the hon. Member for Ashton-under-Lyne (Mr. Sheldon).

Mr. Sheldon: There is the crucial question of the £42 million promised by the Government in November and the £18 million promised by the banks to the Rolls-Royce company. This, it was stated in the House, would be made available to the company, and if it had been made so available that money would be part of the value of Rolls-Royce which would be available for creditors. Subsequently in a letter to my hon. Friend the Member for Heywood and Royton (Mr. Barnett) a correction was made, which the credi-

tors of Rolls-Royce were not in a position to receive or to be informed of. They could well have made a decision to have carried on supplying goods to Rolls-Royce on the basis of a statement made in this House and countermanded by private letter. This is an important matter, and the Minister or the Solicitor-General must state to the House what they intend to do.

Hon. Members: Answer.

Mr. Speaker: My judgment is that it would be better to allow a little more time for the winding-up speeches. Mr. Wedgwood Benn.

Mr. Benn: Mr. Benn rose——

Mr. Dennis Howell: moved,, That the debate be now adjourned, but Mr. SPEAKER, pursuant to Standing Order No. 28 (Dilatory motion in abuse of rules of the House), declined to propose the Question thereupon to the House.

Mr. Barnett: On a point of order, Mr. Speaker. On this very important matter of the finance for this Bill, the Minister of Aviation Supply in answer to a Question by me in November said the £42 million would be available regardless of the accountants' report. He then wrote me a letter—it is in HANSARD—in which he said that he had made a mistake. I wrote back and said that this was a very important matter and asked him to make a statement to the House correcting his original misleading statement in the House. It now turns out to have very serious consequences——

Mr. Speaker: Order. This cannot conceivably be a point of order. It is a point of argument which no doubt the Minister will have noted. I think it is best to give the House more time for the winding-up speech from the Opposition Front Bench now and then for the Minister to reply.

Mrs. Judith Hart: On a point of order, Mr. Speaker. I do not want to delay the House, because it is very important that we should proceed to carry the Second Reading of this Bill. Nevertheless. the replies that the Solicitor-General has given, particularly in their relationship to the intention to defraud creditors and the Receiver's disposal of the assets in relation


to this Bill, which involves the Crown's acquisition of assets, is so unsatisfactory that I wonder whether the Leader of the House would say that after Second Reading we could have a further statement and another opportunity for questioning the hon. and learned Gentleman.

Mr. Speaker: Order. We must proceed. I will call the right hon. Gentleman who is to wind up for the Opposition and then the Minister can reply to the debate. Mr. Benn.

9.18 p.m.

Mr. Anthony Wedgwood Benn: In beginning my winding-up speech, which I want to keep brief so that the Minister may have time to answer further questions, 1 am bound to say that 1 cannot recall a debate on a Bill which has been handled in such an extraordinary way by the Government. I do not use that form of words which is sometimes used when there are great party arguments about a Bill because, as the right hon. Gentleman knows very well, we have made it clear over the last few days that we wish to facilitate this Bill although we have the gravest doubts about some of its provisions.
Throughout the debate there has been a remarkable degree of unanimity of view on both sides, based upon certain simple things, namely, that the demise of Rolls-Royce was a tragedy, that the workers involved were among the most skilled in the country, that the good name of this country was involved and that we wanted to try to remedy the position as quickly as we could. I pay tribute to the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd), who gave a most realistic account of what he called the "aerospace hybrid" we were discussing which greatly contributed to an understanding of the problem we have to face.
However, it was a fantastic lapse in imagination by the Minister of Aviation Supply to suppose that he could present a Bill to the House as if it were just an interesting new experiment in relations between Government and industry. At no point in his prepared speech—the right hon. Gentleman will know that I am being fair—did he even turn his mind to the plight of companies and their workers who were faced this weekend by the same decision with less well-equipped

legal advisers than Rolls-Royce had about what they should do in the circumstances which faced them.
It was good of the Solicitor-General to walk into the House and, without sitting on the Front Bench, speak to us from the Dispatch Box, but he could not add much more than a Penguin guide to the citizen on his rights because this situation is not like any other situation. It is quite unlike any other situation. When a company does business with another company which goes bankrupt, it is not normal for the Government to say, "We are going to buy bits of the company which has gone bankrupt". It is not normal, if there is to be an act of public ownership, for the Government to say, "We do not know what we will buy or what we shall pay for it until later". It is not normal for the Government to say, "Meanwhile, we shall keep bits of the company we propose to buy going for four weeks to see what happens". We wanted the advice of the Solicitor-General or the Minister to give us some guidance so that the companies involved would know where they stood.
1 do not blame the Solicitor-General for not being able to say things which would help those creditors who will be reading HANSARD, but I hope—and I am not a lawyer—that they will read something in what he said to suggest that "reasonable prospect" has been varied in a way which is beneficial by the Solicitor-General's intervention and that in so doing they will not feel that they are legally obliged, because of their dilemma and problem, to go bankrupt.
For many years the favourite word of the Prime Minister has been "incompetent". He has thrown the word "incompetent" across from this Dispatch Box time after time. I can only say to the Leader of the House, who today has been as helpful as any Leader of the House could have been, that the Government's handling of the consequences of their own decision to let Rolls-Royce go bankrupt has been absolutely incompetent. [Interruption.] I am talking about the handling of the decision to bring about a bankruptcy and the fact that in the House today no proper answers were given to legitimate questions put by hon. Members on both sides of the House on behalf of their constituents. That is my first charge.


The reason why the Minister and the Solicitor-General could not say anything was that the Chancellor of the Exchequer has laid it down quite clearly that sufficient funds are not to be made available to meet the problem. We are paying in advance the price of the popularity of the Budget tax cut to come at the end of March.
The Minister of Aviation Supply must surely have argued for the RB211 engine because all the advice given to him by the engineers and others in his Department cannot have shifted so much in the months since he took office. He must have argued, as any Minister for the British aerospace industry would be bound to argue, that Rolls-Royce should not go bankrupt, that that should not be the method chosen to carry through the Government's economy measures. He is not a member of the Cabinet. He is the first Minister of Aviation for three or four years not able to sit through the Cabinet discussions but presumably called in when the issue is discussed. He has been put by the Cabinet, and presumably by the Prime Minister and the Chancellor of the Exchequer, in the position of having to present to the House a situation in which the consequences of the Cabinet's decisions had not been properly thought out.

Sir Harry Legge-Bourke (Isle of Ely): Will the right hon. Gentleman consider just this possibility, that what my right hon. Friend has insisted upon doing is not raising hopes falsely as the right hon. Gentleman did?

Mr. Benn: To bankrupt the greatest name in British engineering in order to avoid raising hopes—I will come to the right hon. Gentleman's point——

Mr. Waddington: Will the right hon. Gentleman recognise that some of us have been appalled over the last few days at his reluctance to accept any responsibility at all? Will he perhaps answer this question, so that we can begin to assess his responsibility for this disaster? How long was it after he first put up the money that he saw the contract?

Mr. Benn: The hon. Gentleman did not hear the debate on Monday. If he had he would have heard me say-and everyone who heard my speech will recall

it—that I accept full responsibility for my part in this, and I demanded a Select Committee inquiry in which it would be possible for this matter to be dealt with. If there are investigations—as there must be—to be made into that period, they should be done by a Select Committee with—so far as I am concerned—evidence taken in public. As I said on Monday, what is wrong is not the contract but the failure to estimate the cost of development.
I come to the question raised by the hon. and gallant Member for Isle of Ely (Sir H. Legge-Bourke) about bankruptcy. Many hon. Members on both sides of the House, including the hon. Member for Langstone, probed the question; why was bankruptcy chosen as the instrument for Rolls-Royce? When Rolls-Royce was faced with a further escalation and reported to the Government that it would find it difficult to meet the date without further investment in research and development, why did not the Government tell Rolls-Royce to go to Lockheed and try to renegotiate, and say that they would have discussions with the Americans? Why did the Government, by their decision to do nothing, force Rolls-Royce into bankruptcy? We have heard absolutely no answer to that question, and that is the nub of the question of credit.
Lest anyone should think that this is a matter of party difference, let me read the words that appeared in the Sunday Times written by Nigel Lawson, the Conservative candidate for Eton and Slough at the last election. He paid a tribute to the Minister of Aviation Supply, and this is what he said:
Thank goodness, however, for Captain Corfield (yes; another lawyer). Not only has he handled a delicate situation with consumate skill. More important, the device of allowing Rolls to bankrupt itself and then taking over pretty well everything except the Lockheed contract has plainly saved the taxpayer an inordinate sum in compensation to the American company. I am left wondering whether it was prescience or luck that led Mr. Heath to appoint as his Minister of Aircraft Supply the relatively little-known author of that authoritative work, 'Corfield on Compensation'.
I am not suggesting that the right hon. Gentleman recommended the course of bankruptcy, but it was that comment, which was reported widely in America, that destroyed the confidence of the


American Government, the American aircraft industry and the American airlines in the word of this country. I say "this country" because it was a contract between British industry and American industry. Nobody had doubted that. But it was also the credit of this country that was at stake.

Mr. John Wilkinsons: rose——

Mr. Benn: No, I am not giving way. We must save time. I must pay tribute to the hon. Member for Hendon, North (Mr. Gorst), who made a controversial maiden speech, but a speech which was enjoyed by all who heard it. He expressed his great faith in the Government, but even so we enjoyed listening to what he had to say. I hope we shall hear him in the House again. No doubt we shall because he is in the communications business.
Every Member who spoke has no doubt been approached not only by companies and creditors in connection with the bankruptcy, but also by the workers of Rolls-Royce and the supplying companies. These are the most skilled men to be found anywhere in British industry. They are synonymous with craftsmanship and excellence. As I said on Monday, some of these people have been reduced to their basic by the Receiver. It must not be forgotten that the Receiver is not obliged to implement the contract with the union any more than he is with Lockheed. To think that we have been debating the legal enforceability of contracts when under bankruptcy any firm can escape from its obligations to its workers.
Many individual workers' cases have been brought to my attention. They may be put on a lower rate of pay for a couple of months, then sacked, and therefor lose hundreds of £s in redundancy payments, in addition to losing their workers' shares. This surely marks the final death knell of co-ownership. These are not workers with no outlets for their products. I have been to many factories which have lost their markets, and I have spoken to miners who have been put out of work through technical change. But these men have worked in this company for many years. One man has worked in the company for 42 years and he will lose his job because of a miscalculation

about a particular development project. That man is told by the right hon. Member for Wolverhampton, South-West (Mr. Powell) that the way to deal with this problem is for a Japanese firm to come in and buy the company. Foreigners cannot come here to live, but if they come here to buy up our industry it is all right. The right hon. Gentleman has been round the country for a couple of years waving a phoney Union Jack to keep the foreigners out. But he does not mind if they come in in pursuit of international market forces and in the process acquire the skill of British engineers and designers who for many years have built up Rolls-Royce to be the best engine company in the world.

Mr. J. Enoch Powell: I do not mind them bringing their money and investing it in this country.

Mr. Benn: The right hon. Gentleman does not mind their money, but with their money will come control.

Mr. Powell: No.

Mr. Benn: The right hon. Gentleman is a great expert in the history of the British empire. He knows that with our money went control and with their money will also come control.

Mr. Powell: What control has attached to the enormous investment by this country in, for example, South America?

Mr. Benn: The right hon. Gentleman knows that it is foreign money that has created the revolutionary situation in South America which is now going to sweep that continent. If the right hon. Gentleman does not understand the Cuban situation in terms of foreign investment, he is not a very good politician. The trouble is that the right hon. Gentlement has admitted frankly, because he is a very honest man—he says what he really thinks; that is why people listen to him—that he would not mind this technology developed in Britain being transferred abroad with the possible consequence that factories here would close because the licences were being developed in other countries.
We believe that the RB211 engine should go ahead. We believe that it is the future of the aero-engine industry.


I shall not go over what the right hon. Gentleman said on Monday night. It may have been clumsy, but it was very damaging for all that. The RB211 is a quieter engine. When we debate the environment it will have a price tag on it. The RB211 has a family of engines associated with it—the RB220, which is smaller with a 25,000 lb. thrust, and the lift fan engine which comes in that general family as well.
We believe that it is right for the RB211 to be supported in part because of the original contract, because that original contract was the launching pad for the technology upon which all major aero-engines will develop in future.
The difficulty is that the Americans have now been told by the Minister that the 10-11 is perhaps not quite as good as the Douglas because Douglas has a long range version available. I spent many hours with Rolls-Royce considering whether it should help to launch a long-range Lockheed, but it was not agreed because there was no market. That is part of the problem which Lockheed has had to face.
At the end of the debate we shall table two Amendments. The first says that we think the whole company should be taken into public ownership. When we table that Amendment it will be in the words "all the engineering divisions", because the Money Resolution has been drafted in such a way to make it impossible for us to put down the whole, but we mean the whole of Rolls-Royce.
There are two ways of arguing this matter. One is the political argument, in which I profoundly believe. But there is perhaps immediately, to retain some measure of agreement across the Floor, a strong technical argument for not trying to dismantle Rolls-Royce at a time when the management has a major job of reconstructing the company and getting it going again.

Sir Harmar Nicholls: Sir Harmar Nicholls rose——

Mr. Benn: Perhaps the hon. Gentleman will allow me to finish what I want to say. Another consequence of the bankruptcy was the putting in of a Receiver. The job of a Receiver, as the Solicitor-General said, is caution—saving money. To put into the heart of a company, which lives on its view to the future,

somebody whose sole responsibility is to save and sell, and to add to that the job of selling off bits regardless whether the components are made in one factory for another, will gravely handicap this company in its return to profitability.

Sir Harmair Nicholls: Does the Amendment mean that the right hon. Gentleman is calmly prepared to accept all the obligations under the contract?

Mr. Benn: I am talking about the decision to acquire. I said on Monday—there is no question about it—that after the bankruptcy it had to be renegotiated. I am talking about the decision to acquire —[Interruption.] Of course it has, because the act of bankruptcy has occurred. 1 said on Monday that I thought that we should try to reach an honourable settlement with Lockheed.
The first Amendment is to the effect that there should be an acquisition of all the engineering divisions. The technical arguments for not adding these management problems to Rolls-Royce at the moment are, in my judgment, absolutely overwhelming.
The second Amendment which we shall table is about keeping Rolls-Royce in public ownership. We shall table that Amendment by putting in the words "on a permanent basis". These Amendments will be circulated after 10 o'clock.
I find it very unattractive, when the Lobbies of the House are full of anxious men who have the greatest skills available, that the main concern of the right hon. Gentleman in his speech today should be to find a form of words which will reassure those who are concerned to see how much can be got back into private hands in a few years' time. It is very unattractive. And it is not only unattractive but it is a nonsense, because there is nobody in the whole House who believes that: if the right hon. Gentleman buys the aero-engine division, makes it profitable and sells it back, what is sold back will be able to survive for five minutes without public money after it has gone back into private hands.
We do not have to say on this side of the House in this case that we would acquire Rolls-Royce back without compensation. All we have to say is that a private Rolls-Royce would not get launching aid again because of the experience of the last few years, and it is


a nonsense to say—[An HON. MEMBER: "Disgraceful."]—it is not disgraceful. If the hon. Gentleman, the right hon. Gentleman, or anybody else thinks that he will acquire Rolls-Royce to save it and then, when he has got it going, sell it back to repeat the same arm's length relationship of high risk contracts of the kind with the RB211, he needs to have his head examined.
I promised that I would give the Minister a good quarter of an hour to make his points and answer questions. Some of the speeches tonight by hon. Gentlemen opposite show that they see this is a caretaker operation. It is a curious phrase to use, because they are talking about a caretaker operation for the most advanced industry in Britain and the two words do not go together.
One right hon. Gentleman talked about merging with Europe. I.R.C. goes in Britain, but some huge new agency to merge with S.N.E.C.M.A. or M.A.N. is to be brought into being. This is no way to approach the immediate problems of Rolls-Royce, which are simple, and known to everyone who is in the industry.
The company must be set up as quickly as possible as a going concern, with its eye on the future, going out for contracts. That will work only if the RB211 renegotiation can be brought off. The funny thing about the aircraft industry is that it is a high risk industry, but it is an industry which, above any other, attracts a high degree of dedication from the people who work in it. If every industry in Britain had working in it people who care as much about what they did as do those in the aircraft industry, with all its faults, there would be no problems of productivity, or exports or anything else.
To be charged with excessive enthusiasm, which was one charge made against me, is a curious charge coming from the spokesman of an industry which has lived and worked on its enthusiasm.

Mr. Tom Boardman: Mr. Tom Boardman rose——

Mr. Benn: I shall not give way.
I am coming to the end of what I have to say, and I want to draw the attention of the House to what we are debating. We are not debating technology, if by technology is meant lumps of metal, however cleverly designed, and however fast

they move. We are talking about people who build technology, and the people who build technology are the workers in Rolls-Royce, B.A.C., Hawker Siddeley, component companies such as Lucas, and others. We are talking about the most valuable skills in Britain today, skills for which there is a market, skills which have a time-scale to develop which lasts well beyond the life of a Minister, or a Parliament or a Cabinet, which lasts ten or 15 years from first conception to full fruition. Concorde began in 1962, survived the Conservative Government, the Labour Government, and now another Conservative Government, and will not enter service until the end of the present Parliament, and I say that this nation and this Parliament have to recognise that the time-scale of industrial development exceeds the time-scale of a Chancellor with his Budget to get right, or a particular Government with their own ideology.
Whatever arrangement may be made between the Government and Rolls-Royce, it is necessary that a nation which lives by its skills should get from this Government the degree of co-operation and intimacy in working within industry which will allow these skills time to develop and to bring the nation the living standards that it requires.

9.45 p.m.

The Parliamentary Secretary to the Ministry of Aviation Supply (Mr. David Price): I would certainly agree with what the right hon. Member for Bristol, South-East (Mr. Benn) said in his peroration, particularly about two points—the importance of the people involved in this situation and the time scale involved in all these projects.
I have only a short time to answer, so I cannot answer every point made in the debate, but I would start by congratulating my hon. Friend the Member for Hendon, North (Mr. Gorst) on his maiden speech. He chose a singularly unusual debate in which to make his maiden speech. I admired his confidence and his assurance, though I cannot say that I agreed with every point he made.
I should like to deal first with some of the major charges made in the debate, because they have reproduced charges which have been made on various occasions in the last few days outside the House, particularly in the United States.


The hon. Member for Ashton-under-Lyne (Mr. Sheldon) suggested that it was the Government which withdrew financial support from Rolls and that, in consequence of that action, Rolls-Royce found itself in the financial position which we all know of. I wish to make it clear to the House beyond further argument that the Government never had withdrawn any financial support committed to Rolls-Royce.
The £47 million of launching aid, that committed by the right hon. Gentleman, had been paid to the company, the £10 million had been made available to the company by the I.R.C., and the additional £42 million launching aid proposed last November in replacement for the second £10 million I.R.C. loan was expressly made subject to a report by independent accountants. As a result of the work of these accountants and its own reappraisal, Rolls-Royce itself decided to discontinue the RB211, in the knowledge that even the additional £42 million would have left the company in the position of trading without the prospect of meeting its commitments——

Mr. Barnett: Mr. Barnett rose——

Mr. Sheldon: Mr. Sheldon rose——

Mr. Price: If hon. Members are not prepared to take it from me, let them look at the statement made by the board of Rolls-Royce when it went into receivership. I must make it clear——

Mr. Barnett: On a point of order——

Mr. Speaker: Order. The Minister has only 15 minutes in which to wind up.

Mr. Price: Mr. Price rose——

Mr. Barnett: Mr. Barnett rose——

Mr. Speaker: Order. If the Minister does not give way, the hon. Members must resume their seat.

Mr. Price: I have——

Mr. Barnett: On a point of order. I would submit to you, Mr. Speaker, that the hon. Member is misleading the House—

Mr. Speaker: Order. That is not a point of order at all: it is a point of argument.

Mr. Heller: It is not.

Mr. Sheldon: Mr. Sheldon rose——

Mr. Price: I have not misled the House. I have said what was in the statement of the Rolls-Royce board.

Mr. Sheldon: Mr. Sheldon rose—

Mr. Speaker: Order. The hon. Member must resume his seat.

Mr. Sheldon: The Minister misquoted me——

Mr. Speaker: Order. The Minister has now only 12 minutes left to reply. [Interruption.] The hon. Member must contain himself.

Mr. Price: If it makes the hon. Member happy, I will give way to him.

Mr. Sheldon: The situation was quite clear in this House, that £42 million was earmarked for Rolls-Royce and £18 million from the bank, so any sub-contractor, seeing that and knowing that that was undertaken, could well have concluded that the company was credit-worthy by that increased amount, and so have continued trading with the company. As a result of the withdrawal of this only in a private letter to my hon. Friend the Member for Heywood and Royton (Mr. Barnett), companies would not have been aware of this and would not have been aware of the liabilities.

Mr. Price: The hon. Member simply is not getting his facts right. This was launching aid. It was tied to the RB211 engine. It was not general finance for Rolls-Royce as a whole. As I said just now, it was the decision of the board of Rolls-Royce that it was unable to carry on with this engine even taking into account the —42 million. So the question does not arise.
I must also make it clear that the Government had not given and could not give an unqualified assurance to do
whatever is necessary to support the programme through to a successful operation over the next twenty years",
which is what has been said by the President of the Lockheed Company.
The suggestion has been made—I noted this particularly in the speech of the hon. Member for Glasgow, Craigton (Mr. Millan)—that the Government were responsible for terminating the RB211 contract. I want to make it absolutely


clear that that is not true. I remind the House of what the Rolls-Royce board's statement said:
These factors give rise to additional costs and liabilities which are wholly beyond the financial resources available to Rolls-Royce. In these circumstances it is not feasible for them to proceed with the RB211 under the present contract.
I want to reply to some of the points made by the hon. Member for Stockton-on-Tees (Mr. William Rodgers). As my right hon. Friend told the House, the Government are prepared to renegotiate the RB211 deal. The actual contract will lie between Lockheed and the receiver, acting in close accordance with our views, and subsequently the successor company.
Let me make clear what we mean. The receiver would naturally require, to protect his own responsibilities to the debenture holders, indemnity from the Government. This he would get. I make it clear that the Government will stand wholly and unambiguously behind the new company. That is a clear undertaking.
The hon. Member for Craigton asked about possible terms for renegotiating the contract. With the best will in the world, I cannot indicate to the House what these might be, as it would put us in a hopeless negotiating position. I repeat that we are ready to renegotiate.
The hon. Gentleman also asked what would be the position of the receiver if he received a higher bid from a foreign source for all the assets which the Government are intending to acquire under the Bill. The Government are determined that the company shall remain in British ownership. So, if the unlikely event of a foreign bid occurred—a foreign bid that was higher than seemed to be the negotiated price between ourselves and the receiver—the Government would have to raise their old price to a level which would enable the Receiver to fulfil his obligations to the debenture holders—[Laughter.]—taking all the circumstances into account.

Mr. Benn: Is the hon. Gentleman telling the House that if Lockheed now makes a bid for Rolls-Royce the Minister will keep above it till Rolls-Royce is put back on its feet?

Mr. Price: The right hon. Gentleman is introducing an entirely hypothetical case.

Hon. Hembers: Resign!

Mr. Price: The right hon. Member for Wednesbury (Mr. Stonehouse), speaking from his own Ministerial experience, suggested that there was implied—

Mr. Roy Jenkins (Birmingham, Stechford): Before the hon. Gentleman moves on, we must give him the opportunity to tell the House—because we can hardly believe it—whether his statement a minute or two ago is or is not the position of the Government. [An HON. MEMBER: "High finance."] Is what the hon. Gentleman told the House, in fact, the case, or did we mishear him, or did he inadvertently make a mistake—that if any foreign bidder puts in a bid the Government will automatically beat it?

Mr. Price: Possibly in the noise the right hon. Gentleman did not hear me. I was saying that the Government are determined that the new company which will result from the Bill shall be British owned, but the Government cannot give orders to the Receiver. This is a point of law, and, therefore, the Receiver is—[Interruption.]

Mr. Frederick Wiley: Mr. Frederick Wiley (Sunderland, North) rose——

Mr. Price: I am trying to respond to the right hon. Gentleman. The Receiver is under a duty to get the best return for the debenture holders taking all the factors into consideration. For instance, I understand that if there was a higher bid from a company whose purpose was simply to put the Rolls-Royce assets out of business—to buy out a competitor, as it were—the Receiver would not at law have to accept that higher bid., [An HON. MEMBER: "What if it, is a genuine bid?"] If a bid came from abroad, as I understand it, the exchange control does not operate on this. It operates only on stocks and shares and not on the transfer of assets. There would have to be a negotiation, which might have to involve other bidding.
In all the circumstances I regard that as a highly hypothetical situation. I have made it perfectly clear what happens in


law. Do I take it that the right hon. Gentleman would allow a foreign bidder to take over the company? If he does not want a foreign bidder, this is the consequence.
I greatly regret the necessity for the Bill. Having accepted the grave and disagreeable circumstances which made it necessary, I can commend it to the whole House with conviction and expectation. I commend it with conviction because it is the only right way open to us to secure vital national interests. I commend it with expectation because the new and reconstructed Rolls-Royce will have the opportunity to be heir to all that is best in the traditions and achievements of the old Rolls-Royce aero-engine business.

Hon. Members: Resign!

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Clegg.]

Committee this day.

BUSINESS OF THE HOUSE

Ordered,
That the Proceedings in Committee on, on Consideration and on Third Reading of, the Rolls-Royce (Purchase) Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Clegg.]

Orders of the Day — ROLLS-ROYCE (PURCHASE) [MONEY]

Queen's Recommendation having been signified—

Resolved,
That for the purpose of any Act of the present Session to make provision for or in conection with the acquisition for the benefit of the Crown of any part of the undertaking and assets of Rolls-Royce Limited or its subsidiaries, and the carrying on of any undertaking so acquired, it is expedient to authorise the payment out of moneys provided by Parliament of any expenditure which may be incurred by a Minister of the Crown—

(a) with a view to or in connection with any such acquisition; or
(b) with a view to or in connection with the carrying on of any undertaking acquired in pursuance of the Act,

including expenditure in subscribing for shares in or securities of, or making loans to, any company so acquiring any undertaking or assets.—[Mr. David Price.]

Orders of the Day — ROLLS-ROYCE (PURCHASE) BILL

Considered in Committee.

[Sir ROBERT GRANT-FERRIS in the Chair]

Clause 1

PROVISION FOR ACQUISITION ETC.

Amendment proposed: No. 1, in page 1, line 11, leave out "any part" and insert "all the engineering divisions".—[Mr. Benn.]

Question put, That the Amendment be made:—

The Committee divided: Ayes 252, Noes 291.

Division No. 158.]
AYES
[10.3 p.m.


Abse, Leo
Broughton, Sir Alfred
Crosland, Rt. Hn. Anthony


Albu, Austen
Brown Bob (N'c'tle-upon-Tyne,W.)
Cunningham, G. (Islington, S.W.)


Allaun, Frank (Salford, E.)
Brown, Hugh D. (G'gow, Provan)
Dalyell, Tam


Allen, Scholefield
Brown, Ronald (Shoreditch &amp; F'bury)
Darling, Rt. Hn. George


Archer, Peter (Rowley Regis)
Buchan, Norman
Davidson, Arthur


Ashley, Jack
Butler, Mrs. Joyce (Wood Green)
Davies, Denzil (Llanelly)


Ashton, Joe
Callaghan, Rt. Hn. James
Davies, G. Elfed (Rhondda, E.)


Atkinson, Norman
Campbell, I. (Dunbartonshire, W.)
Davies, Ifor (Gower)


Bagier, Cordon A. T.
Carmichael, Neil
Davies, S. O. (Merthyr Tydvil)


Barnes, Michael
Carter, Ray (Birmingh'm. Northfield)
Davis, Clinton (Hackney, C.)


Barnett, Joel
Carter-Jones, Lewis (Eccles)
Deakins, Eric


Beaney, Alan
Castle, Rt. Hn. Barbara
de Freitas, Rt. Hn. Sir Geoffrey


Benn, Rt. Hn. Anthony Wedgwood
Clark, David (Colne Valley)
Dempsey, James


Bennett, James (Glasgow, Bridgeton)
Cocks, Michael (Bristol, S.)
Doig, Peter


Bidwell, Sydney
Cohen, Stanley
Dormand, J. D.


Bishop, E. S.
Coleman, Donald
Douglas,Dick (Stirlingshire, E.)


Blenkinsop, Arthur
Concannon, J. D.
Douglas-Mann, Bruce


Boardman, H. (Leigh)
Conlan, Bernard
Driberg, Tom


Booth, Albert
Corbet, Mrs. Freda
Duffy, A. E. P.


Bottomley, Rt. Hn. Arthur
Cox, Thomas (Wandsworth, C.)
Dunn, James A.


Boyden, James (Bishop Auckland)
Crawshaw, Richard
Dunnett, Jack


Bradley, Tom
Cronin, John
Eadie, Alex




Edelman, Maurice
Lee, Rt. Hn. Frederick
Price, J. T. (Westhoughton)


Edwards, Robert (Bilston)
Leonard, Dick
Probert, Arthur


Edwards, William (Merioneth)
Lester, Miss Joan
Rankin, John


Ellis, Tom
Lever, Rt. Hn. Harold
Reed, D. (Sedgefield)


English, Michael
Lewis, Arthur (W. Ham, N.)
Rees, Merlyn (Leeds, S.)


Evans, Fred
Lewis, Ron (Carlisle)
Rhodes, Geoffrey


Fernyhough, E.
Lipton, Marcus
Richard, Ivor


Fisher,Mrs.Doris(R'ham,Ladywood)
Lomas, Kenneth
Roberts, Albert (Normanton)


Fitch, Alan (Wigan)
Loughlin, Charles
Roberts,Rt.Hn.Goronwy(Caernarvon)


Fletcher, Raymond (Ilkeston)
Lyon, Alexander W. (York)
Robertson, John (Paisley)


Fletcher, Ted (Darlington)
Lyons, Edward (Bradford E.)
Roderick, Caerwyn E.(Br'c'n&amp;R'dnor)


Foley, Maurice
Mabon, Dr. J. Dickson
Rodgers, William (Stockton-on-Tees)


Foot, Michael
McBride, Neil
Roper, John


Ford, Ben
McCartney, Hugh
Rose, Paul B.


Freeson,reginald
McElhone, Frank
Ross, Rt. Hon. William (Kilmarnock)


Galpern, Sir Myer
McGuire, Michael
Sheldon, Robert (Ashton-under-Lyne)


Garrett, W. E.
Mackenzie, Gregor
Shore, Rt. Hn. Peter (Stepney)


Gilbert, Dr. John
Mackie, John
Short, Mrs. Renée (W'hampton,N.E.)


Ginsburg, David
Mackintosh, John P.
Silkin, Rt. Hn. John (Deptford)


Golding, John
Maclennan, Robert
Silkin, Hn. S. C. (Dulwich)


Gourley, Harry
McMillan, Tom (Glasgow, C.)
Sillars, James


Grant, George (Morpeth)
McNamara, J. Kevin
Skinner, Dennis


Grant, John D. (Islington, E.)
MacPherson, Malcolm
Small, William


Griffiths, Eddie (Brightside)
Mahon, Simon (Bootle)
Smith, John (Lanarkshire, N.)


Griffiths, Will (Exchange)
Mallalieu, E. L. (Brigg)
Spearing, Nigel


Hamilton, William (Fife, W.)
Marks, Kenneth
Spriggs, Leslie


Hannan, William (G'gow, Maryhill)
Marquand, David
Stallard, A. W.


Hardy, Peter
Marquand, David
Stoddart, David (Swindon)


Harper, Joseph
Marsh, Rt. Hn. Richard
Stonehouse, Rt. Hn. John


Harrison, Walter (Wakefield)
Mason, Rt. Hn. Roy
Strang, Gavin


Hart, Rt. Hn. Judith
Mayhew, Christopher
Strauss, Rt. Hn. G. R.


Hattersley, Roy
Meacher, Michael
Summerskill, Hn. Dr. Shirley


Hefter, Eric S.
Mellish, Rt. Hn. Robert
Swain, Thomas


Hilton, W. S.
Mendelson, John
Taverne, Dick


Horam, John
Millan, Bruce
Thomas,Rt.Hn.George (Cardiff,W.)


Houghton, Rt. Hn. Douglas
Miller, Dr. M. S.
Thomas, Jeffrey (Abertillery)


Howell, Denis (Small Heath)
Milne, Edward (Blyth)
Thomson, Rt. Hn. G. (Dundee, E.)


Huckfield, Leslie
Molloy, William
Thorpe, Rt. Hn. Jeremy


Hughes, Rt. Hn. Cledwyn (Anglesey)
Morgan, Elystan (Cardiganshire)
Tinn, James


Hughes, Mark (Durham)
Morris, Alfred (Wythenshawe)
Tomney, Frank


Hughes, Robert (Aberdeen, N.)
Morris, Charles R. (Openshaw)
Torney, Tom


Hughes, Roy (Newport)
Morris, Rt. Hn. John (Aberavon)
Tuck, Raphael


Hunter, Adam
Moyle, Roland
Urwin, T. W.


Irvine,Rt.Hn.SirArthur(Edge Hill)
Mulley, Rt. Hn. Frederick
Varley, Eric G.


Janner, Greville
Murray, Ronald King
Wainwright, Edwin


Jay, Rt. Hn. Douglas
O'Halloran, Michael
Walden, Brian (B'm'ham, All Saints)


Jeger,Mrs.Lena(H'b'n&amp;St.P'cras,S.)
O'Malley, Brian
Wallace, George


Jenkins, Hugh (Putney)
Oram, Bert
Watkins, David


Jenkins, Rt. Hn. Roy (Stechford)
Orbach, Maurice
Weitzman, David


John, Brynmor
Orme, Stanley
Wellbeloved, James


Johnson, James (K'ston-on-Hull, W.)
Oswald, Thomas
Wells, William (Walsall, N.)


Johnson, Walter (Derby, S.)
Owen, Dr. David (Plymouth, Sutton)
White, James (Pollok)


Jones, Barry (Flint, E.)
Palmer, Arthur
Whitlock, William


Jones, Dan (Burnley)
Pannell, Rt. Hn. Charles
Willey, Rt. Hn. Frederick


Jones, Gwynoro (Carmarthen)
Pardoe, John
Williams, Alan (Swansea, W.)


Jones, T. Alec (Rhondda, W.)
Parker, John (Dagenham)
Williams, Mrs. Shirley (Hitchin)


Judd, Frank
Parry, Robert (Liverpool, Exchange)
Williams, W. T. (Warrington)


Kaufman, Gerald
Pavitt, Laurie
Wilson, Alexander (Hamilton)


Kelley, Richard
Peart, Rt. Hn. Fred
Wilson, Rt. Hn. Harold (Huyton)


Kinnock, Neil
Pendry, Tom
Wilson, William (Coventry, S.)


Lambie, David
Pentland, Norman



Lamond, James
Perry, Ernest C.
TELLERS FOR THE AYES:


Latham, Arthur
Prentice, Rt. Hn. Reg.
Mr. Ernest Armstrong and


Lawson, George
Prescott, John
Mr. James Hamilton.




NOES


Adley, Robert
Biffen, John
Buchanan-Smith, Alick(Angus,N&amp;M)


Alison, Michael (Barkston Ash)
Biggs-Davison, John
Buck, Anthony


Archer, Jeffrey (Louth)
Blaker, Peter
Bullus, Sir Eric


Astor, John
Boardman, Tom (Leicester, S.W.)
Burden, F. A.


Atkins, Humphrey
Body, Richard
Butler, Adam (Bosworth)


Awdry, Daniel
Boscawen, Robert
Campbell, Rt.Hn,G.(Moray &amp; Nairn)


Baker, Kenneth (St. Marylebone)
Bossom, Sir Clive
Carlisle, Mark


Baker, W. H. K. (Banff)
Bowden, Andrew
Cary, Sir Robert


Batniel, Lord
Boyd-Carpenter, Rt. Hn. John
Channon, Paul


Barber, Rt. Hn. Anthony
Braine, Bernard
Chapman, Sydney


Batsford, Brian
Bray, Ronald
Chataway, Rt. Hn. Christopher


Beamish, Col. Sir Tufton
Brewis, John
Churchill, W. S.


Bell, Donald
Brinton, Sir Tatton
Clark, William (Surrey, E.)


Bennett, Sir Frederic (Torquay)
Brocklebank-Fowler, Christopher
Clarke, Kenneth (Rushcliffe)


Bennett, Dr. Reginald (Gosport)
Brown, Sir Edward (Bath)
Cockeram, Eric


Benyon, W.
Bruce-Gardyne, J.
Cooke, Robert


Berry, Hn. Anthony
Bryan, Paul
Coombs, Derek







Cooper, A. E.
Hunt, John
Pink, R. Bonner


Cordle, John
Hutchison, Michael Clark
Powell, Rt. Hn. J. Enoch


Corfield, Rt.Hn. Frederick
Iremonger, T. L.
Price, David (Eastleigh)


Cormack, Patrick
Irvine, Bryant Godman (Rye)
Proudfoot, Wilfred


Costain,A. P.
James, David
Pym, Rt. Hn. Francis


Critchley, Julian
Jenkin, Patrick (Woodford)
Quennell, Miss J. M.


Crouch, David
Jessel, Toby
Raison, Timothy


Crowder, F. P.
Johnson Smith, G. (E. Grinstead)
Ramsden, Rt. Hn. James


Curran, Charles
Jones, Arthur (Northants, S.)
Redmond, Robert


Dalkeith, Earl of
Jopling, Michael
Rees, Peter (Dover)


Davies, Rt. Hn. John (Knutsford)
Joseph, Rt. Hn. Sir Keith
Renton, Rt.Hn. Sir David


d-Avigdor-Goldsmid, Sir Henry
Kaberry, Sir Donald
Rhys Williams, Sir Brandon


d'Avigdor-Goldsmid, Maj.-Gen. Jack
Kellett, Mrs. Elaine
Ridley, Hn. Nicholas


Dean, Paul
Kershaw, Anthony
Ridsdale, Julian


Deedes, Rt. Hn. W. F.
Kilfedder, James
Roberts, Michael (Cardiff, N.)


Dighy, Simon Wingfield
Kimball, Marcus
Roberts, Wyn (Conway)


Dixon, Piers
King, Evelyn (Dorset, S.)
Rossi, Hugh (Hornsey)


Dodds-Parker, Douglas
King, Tom (Bridgwater)
Rost, Peter


Douglas-Home, Rt. Hn. Sir Alec
Kinsey, J. R.
Royle, Anthony


Drayson, G. B.
Kirk, Peter
Russell, Sir Ronald


Dykes, Hugh
Kitson, Timothy
St. John-Stevas, Norman


Eden, Sir John
Knight, Mrs. Jill
Scott, Nicholas


Edwards, Nicholas (Pembroke)
Knox, David
Scott-Hopkins, James


Elliot, Capt. Walter (Carshalton)
Lambton, Antony
Sharples, Richard


Elliott, R. W. (N'c'te-upon-Tyne,N.)
Lane, David
Shaw, Michael (Sc'b'gh &amp; Whitby)


Emery, Peter
Langford-Holt, Sir John
Shelton, William (Clapham)


Eyre, Reginald
Legge-Bourke, Sir Harry
Simeons, Charles


Farr, John
Le Marchant, Spencer
Sinclair, Sir George


Fell, Athony
Lewis, Kenneth (Rutland)
Skeet, T. H. H.


Fenner, Mrs. Peggy
Lloyd, Ian (P'tsm'th, Langstone)
Smith, Dudley (W'wick &amp; L'mington)


Fidler, Michael
Longden, Gilbert
Soref, Harold


Finsberg, Geoffrey (Hampstead)
Loveridge, John
Spence, John


Fisher, Nigel (Surbiton)
McAdden, Sir Stephen
Sproat, Iain


Fookes, Miss Janet
MacArthur, Ian
Stainton, Keith


Fortescue, Tim
McCrindle, R. A.
Stanbrook, Ivor


Foster, Sir John
McLaren, Martin
Stewart-Smith, D. G. (Belper)


Fowler, Norman
Maclean, Sir Fitzroy
Stodart, Anthony (Edinburgh, W.)


Fox, Marcus
McMaster, Stanley
Stoddart-Scott, Col. Sir M.


Fry, Peter
Macmillan, Maurice (Farnham)
Stokes, John


Galbraith, Hn. T. G.
McNair-Wilson, Michael
Stuttaford, Dr. Tom


Gardner, Edward
McNair-Wilson, Patrick (NewForest)
Sutcliffe, John


Gibson-Watt, David
Maddan, Martin
Tapsell, Peter


Gilmour, Sir John (Fife, E.)
Madel, David
Taylor, Sir Charles (Eastbourne)


Glyn, Dr. Alan
Marples, Rt. Hn. Ernest
Taylor,Edward M.(G'gow,Cathcart)


Coodhew Victor
Marten, Neil
Taylor, Frank (Moss Side)


Gorst, John
Mather, Carol
Taylor, Robert (Croydon, N.W.)


Gower Raymond
Mather, Angus
Tebbit, Norman


Grant, Anthony (Harrow, C.)
Maude, Angus
Temple, John M.


Gray, Hamish
Maudling, Rt. Hn. Reginald
Thatcher, Rt. Hn. Mrs. Margaret


Green, Alan
 Mawby, Ray
Thomas, John Stradilng (Monmouth)


Grieve Percy
Maxwell-Hyslop, R. J.
 Thomas, Rt. Hn. Peter (Hendon, S.)


Griffiths, Eldon (Bury St. Edmunds)
Meyer, Sir Anthony
Thompson, Sir Richard (Croydon, S.)


Grylls, Michael
Mills, Peter (Torrington)
Tilney, John


Gummer, Selywn
Miscampbell, Norman
Trafford, Dr. Anthony


Gurden, Harold
Mitchell,Lt.Col.C.(Aberdeenshire,W)
Trew, Peter


Hall, Miss Joan (Keighley)
Moate, Roger
Tugendhat, Christopher


Hall, John (Wycombe)
Molyneaux, James
Turton, Rt. Hn. R. H.


Hall-Davis, A.G.F.
Money, Ernie
van Strauhenzee, W. R.


Hamilton, Michael (Salisbury)
Monks, Mrs. Connie
Vaughan, Dr. Gerard


Hamilton, John (Exeter)
Montgomery, Fergus
Vickers, Dame Joan


Harrison, Brian (Maldon)
More, Jasper
Waddington, David


Harrison, Col, Sir Harwood (Eye)
Morgan, Geraint (Denbigh)
Walker, David (Clitheroe)


Harvey, Sir Arthur Vere
Morgan-Giles,Rear-Adm.
Walker, Rt. Hn. Peter (Worcester)


Haselhurst, Alan
Morrison, Charles (Devizes)
Walker-Smith, Rt. Hn. Sir Derek


Hastings, Stephen
Mudd, David
Wall, Patrick


Havers, Michael
Murton, Oscar
Walters, Dennis


Hawkins, Paul
Nabarro, Sir Gerald
Ward, Dame Irene


Hayhoe, Barney
Neave, Airey
Weatherill, Bernard


Heath, Rt. Hn. Edward
Nicholls, Sir Harmar
Wells, John (Maidstone)


Heseltine, Michael
Noble, Rt.Hn. Michael
Whitelaw, Rt. Hn. William


Hicks, Robert
Normanton, Tom
Wiggin, Jerry


Higgins, Terence L.
Onslow, Cranley
Wilkinson, John


Hiley, Joseph
Oppenheim, Mrs. Sally
Woodhouse, Hn. Christopher


Hill, John E.B. Norfolk, S.)
Osborn, John
Woodnutt, Mark


Hill, James (Southampton, Test)
Owen, Idris (Stockport, N.)
Worsley, Marcus


Holland, Philip
Page, John (Harrow, W.)
Wylie, Rt. Hn. N. R.


Hordern, Peter
Paisley, Mr. Ian



Hornby, Richard
Parkinson, Cecil (Enfield, W.)



Horsby-Smlth,Rt.Hn.Dame Patricia
Peel, John
TELLERS FOR THE NOES:


Howe, Hn. Sir Geoffrey (Reigate)
Percival, Ian
Mr. Walter Clegg and


Howell, David (Guildford)
Peyton, Rt. Hn. John
Mr. Keith Speed.


Howell, Ralph (Norfolk, N.)
Pike, Miss Mervyn

The Chairman: I inform the Committee that a Paper showing the manuscript Amendments should now be available to all right hon. and hon. Members in the Vote Office. We come now to Amendment No. 3, in the name of the right hon, Gentleman the Member for Bristol, South-East (Mr. Benn), in page 1, line 15, after "on" insert "on a permanent basis".
For discussion, we shall take at the same time the following two Amendments in the name of the hon. Member for Honiton (Mr. Emery):
No. 4, in page 1, line 15, after "on", insert
for a limited time which shall expire on 31st December, 1975, save as is provided in subsection (2) of this section".
No. 5, in page 1, line 19, at end insert:
(2) The period during which a Minister may carry on any undertaking acquired under section 1 of this Act may be extended for further periods of 12 months by resolution which shall be subject to the approval of the House of Commons".

Hon. Members: No.

Mr. Benn: On a point of order—

Mr. R. J. Maxwell-Hyslop: On a point of order——

Mr. Benn: I am on a point of order, too. I had indicated that it was our desire formally to move Amendments 2 and 3 together. Grouping the three makes the matter rather more complicated.
I beg to move Amendment No. 2, in page 1, line 12, after "assets" insert "connected therewith" and Amendment No. 3, in page 1, line 15, after "on" insert "on a permanent basis".

The Chairman: Order. I think the right hon. Gentleman is under a slight misapprehension. Amendment No. 2 has

fallen, so now we come to Amendment No. 3.

Mr. Thomas Torney (Bradford, South): On a point of order——

The Chairman: Order. May I finish what I have to say and then I shall be glad to listen to the hon. Gentleman. The Amendment we are to discuss reads: In page 1, line 15, after "on" insert "on a permanent basis". With it is the much longer Amendment for discussion—[HON. MEMBERS: "No."]—of the hon. Member for Honiton (Mr. Emery).

Mr. Peter Emery (Honiton): On a point of order——

Mr. Benn: Are the Amendments obliged to be grouped together, Sir Robert?

Mr. Emery: The Amendment that I wish to move is in direct contradiction to that of the Socialists. I believe that it would be for the convenience of the Committee if it could be moved separately.

The Chairman: We need not take any time over this. If the Committee wishes it so, it is absolutely entitled to have it so. All that the Chair tries to do is to help the Committee and facilitate matters. If the right hon. Gentleman would like to move his Amendment alone, we shall take it alone and then consider the hon. Gentleman's Amendment.

Mr. Benn: I beg to move Amendment No. 3: In page 1, line 15, after "on" insert "on a permanent basis".

Question put, That the Amendment be made:—

The Committee divided: Ayes 255, Noes 295.

Division No. 159.]
AYES
[10.18 p.m.


Abse, Leo
Bottomley, Rt. Hn. Arthur
Corbet, Mrs. Freda


Albu, Austen
Boyden, James (Bishop Auckland)
Cox, Thomas (W andsworth, C.)


Allaun, Frank (Salford, E.)
Bradley, Tom
Crawshaw, Richard


Allen, Scholefield
Broughton, Sir Alfred
Cronin, John


Archer, Peter (Rowley Regis)
Brown, Bob (N'c'tle-upon-Tyne,W.)
Crosland, Rt. Hn. Anthony


Armstrong, Ernest
Brown, Hugh D. (G'gow, Provan)
Cunningham, G. (Islington, S.W.)


Ashley, Jack
Brown, Ronald (Shoreditch &amp; F'bury)
Dalyell, Tam


Ashton, Joe
Buchan, Norman
Darling, Rt. Hn. George


Atkinson, Norman
Butler, Mrs. Joyce (Wood Green)
Davidson, Arthur


Bagier, Gordon A. T.
Callaghan, Rt. Hn. James
Davies, Denzil (Llanelly)


Barnes, Michael
Campbell, I. (Dunbartonshire, W.)
Davies, G. Elfect (Rhondda, E.)


Barnett, Joel
Carmichael, Neil
Davies, Ifor (Gower)


Bewley, Alan
Carter, Ray (Birmingh'm, Northfield)
Davies, S. 0. (Merthyr Tydvil)


Benn, Rt. Hn. Anthony Wedgwood
Carter-Jones, Lewis (Eccles)
Davis, Clinton (Hackney, C.)


Bennett, James (Glasgow, Bridgeton)
Castle, Rt. Hn. Barbara
Deakins, Eric


Bidwell, Sydney
Clark, David (Colne Valley)
de Freitas, Rt. Hn. Sir Geoffrey


Bishop, E. S.
Cocks, Michael (Bristol, S.)
Dempsey, James


Blenkinsop, Arthur
Cohen, Stanley
Doig, Peter


Boardman, H. (Leigh)
Concannon, J. D.
Dormand, J. D.


Booth, Albert
Conlan, Bernard
Douglas, Dick (Stirlingshire, E.)




Douglas-Mann, Bruce
Kinnock, Neil
Perry, Ernest G.


Driberg, Tom
Lambie, David
Prentice, Rt. Hn. Reg.


Duffy, A. E. P.
Lamond, James
Prescott, John


Dunn, James A.
Latham, Arthur
Price, J. T. (Westhoughton)


Dunnett, Jack
Lawson, George
Probert, Arthur


Eadie, Alex
Leadbitter, Ted
Rankin, John


Edelman, Maurice
Lee, Rt. Hn. Frederick
Reed, D. (Sedgefield)


Edwards, Robert (Bilston)
Leonard, Dick
Rees, Merlyn (Leeds, S.)


Edwards, William (Merioneth)
Lestor, Miss Joan
Rhodes, Geoffrey


Ellis, Tom
Lever, Rt. Hn. Harold
Richard, Ivor


English, Michael
Lewis, Arthur (W. Ham, N.)
Roberts, Albert (Normanton)


Evans, Fred
Lewis, Ron (Carlisle)
Roherts,Rt.Hn.Goronwy(Caernarvon)


Fernyhough, E.
Lipton, Marcus
Robertson, John (Paisley)


Fisher,Mrs.Doris(B'ham,Ladywood)
Lomas, Kenneth
Roderick, Caerwyn E.(Br'c'n&amp;R'dnor)


Fitt, Gerard (Belfast, W.)
Loughlin, Charles
Rodgers, William (Stockton-on-Tees)


Fletcher, Raymond (Ilkeston)
Lyon, Alexander W. (York)
Roper, John


Fletcher, Ted (Darlington)
Lyons, Edward (Bradford, E.)
Rose, Paul B.


Foley, Maurice
Mabon, Dr. J. Dickson
Ross, Rt. Hn. William (Kilmarnock)


Foot, Michael
McBride, Neil
Sheldon, Robert (Ashton-under-Lyne)


Ford, Ben
McCartney, Hugh
Shore, Rt. Hn. Peter (Stepney)


Fraser, John (Norwood)
McElhone, Frank
Short, Mrs. Renée (W'hampton,N.E.)


Freeson, Reginald
McGuire, Michael
Silkin, Rt. Hn. John (Deptford)


Galpern, Sir Myer
Mackenzie, Gregor
Silkin, Hn. S. C. (Dulwich)


Garrett, W. E.
Mackie, John
Sillars, James


Gilbert, Dr. John
Mackintosh, John P.
Skinner, Dennis


Ginsburg, David
Maclennan, Robert
Small, William


Golding, John
McMillan, Tom (Glasgow, C.)
Smith, John (Lanarkshire, N.)


Gourlay, Harry
McNamara, J. Kevin
Spearing, Nigel


Grant, George (Morpeth)
MacPherson, Malcolm
Spriggs, Leslie


Grant, John D. (Islington, E.)
Mahon, Simon (Bootle)
Stallard, A. W.


Griffiths, Eddie (Brightside)
Mallalieu, E. L. (Brigg)
Stoddart, David (Swindon)


Griffiths, Will (Exchange)
Marks, Kenneth
Stonehouse, Rt. Hn. John


Hamilton, James (Bothwell)
Marquand, David
Strang, Gavin


Hamilton, William (Fife, W.)
Marsh, Rt. Hn. Richard
Strauss, Rt. Hn. G. R.


Hannan, William (G'gow, Maryhill)
Mason, Rt. Hn. Roy
Summerskill, Hn. Dr. Shirley


Hardy, Peter
Mayhew, Christopher
Swain, Thomas


Harper, Joseph
Meacher, Michael
Taverne, Dick


Harrison, Walter (Wakefield)
Mellish, Rt. Hn. Robert
Thomas,Rt.Hn.George (Cardiff,W.)


Hart, Rt. Hn. Judith
Mendelson, John
Thomas, Jeffrey (Abertillery)


Hattersley, Roy
Milian, Bruce
Thomson, Rt. Hn. G. (Dundee, E.)


Heffer, Eric S.
Miller, Dr. M. S.
Tinn, James


Hilton, W. S.
Milne, Edward (Blyth)
Tomney, Frank


Horam, John
Molloy, William
Torney, Tom


Houghton, Rt. Hn. Douglas
Morgan, Elystan (Cardiganshire)
Tuck, Raphael


Howell, Denis (Small Heath)
Morris, Alfred (Wythenshawe)
Urwin, T. W.


Huckfield, Leslie
Morris, Charles R. (Openshaw)
Varley, Eric G.


Hughes, Rt. Hn. Cledwyn (Anglesey)
Morris, Rt. Hn. John (Aberavon)
Wainwright, Edwin


Hughes, Mark (Durham)
Moyle, Roland
Walden, Brian (B'm'ham, All Saints)


Hughes, Robert (Aberdeen, N.)
Mulley, Rt. Hn. Frederick
Walker, Rt. Hn. Peter (Worcester)


Hughes, Roy (Newport)
Murray, Ronald King
Wallace, George


Hunter, Adam
Ogden, Eric
Watkins, David


Irvine,Rt.Hn.SirArthur(Edge Hill)
O'Halloran, Michael
Weitzman, David


Janner, Gneville
O'Malley, Brian
Wellbeloved, James


Jay, Rt. Hn. Douglas
Oram, Bert
Wells, William (Walsall, N.)


Jeger,Mrs.Lena((H'b'n&amp;St.P'cras,S.)
Orbach, Maurice
White, James (Glasgow, Pollok)


Jenkins, Hugh (Putney)
Orme, Stanley
Whitlock, William


Jenkins, Rt. Hn. Roy (Stechford)
Oswald, Thomas
Willey, Rt. Hn. Frederick


John, Brynmor
Owen, Dr. David (Plymouth, Sutton)
Williams, Alan (Swansea, W.)


Johnson, James (K'ston-on-Hull, W.)
Palmer, Arthur
Williams, Mrs. Shirley (Hitchin)


Johnson, Walter (Derby, S.)
Pannell, Rt. Ho. Charles
Williams, W. T. (Warrington)


Jones, Barry (Flint, E.)
Parker, John (Dagenham)
Wilson, Alexander (Hamilton)


Jones, Dan (Burnley)
Parry, Robert (Liverpool, Exchange)
Wilson, Rt. Hn. Harold (Huyton)


Jones, Gwynoro (Carmarthen)
Pavitt, Laurie
Wilson, William (Coventry, S.)


Jones, T. Alec (Rhondda, W.)
Peart, Rt. Hn. Fred



Judd, Frank
Pendry, Tom
TELLERS FOR THE AYES:


Kaufman, Gerald
Pentland, Norman
Mr. Alan Fitch and


Kelley, Richard

Mr. Donald Coleman




NOES


Adley, Robert
Benyon, W.
Brocklebank-Fowler, Christopher


Alison, Michael (Barkston Ash)
Berry, Hn. Anthony
Brown, Sir Edward (Bath)


Archer, Jeffrey (Louth)
Biffen, John
Bruce-Cardyne, J.


Astor, John
Biggs-Davison, John
Bryan, Paul


Atkins, Humphrey
Blaker, Peter
Buchanan-Smith, Alick(Angus,N&amp;M)


Awdry, Daniel
Boardman, Tom (Leicester, S.W.)
Buck, Antony


Baker, Kenneth (St. Marylebone)
Body, Richard
Bullus, Sir Eric


Baker, W. H. K. (Banff)
Boscawen, Robert
Burden, F. A.


Balniel, Lord
Bossom, Sir Clive
Butler, Adam (Bosworth)


Barber, Rt. Hn. Anthony
Bowden, Andrew
Campbell,Rt.Hn.G.(Moray&amp;Nairn)


Batsford, Brian
Boyd-Carpenter, Rt. Hn. John
Carlisle, Mark


Beamish, Col. Sir Tufton
Braine, Bernard
Cary, Sir Robert


Bell, Ronald
Bray, Ronald
Channon, Paul


Bennett, Sir Frederic (Torquay)
Brewis, John
Chapman, Sydney


Bennett, Dr. Reginald (Gosport)
Brinton, Sir Tatton
Chataway, Rt. Hn. Christopher







Churchill, W. S.
Howell, David (Guildford)
Peyton, Rt. Hn. John


Clark, William (Surrey, E.)
Howell, Ralph (Norfolk, N.)
Pike, Miss Mervyn


Clarke, Kenneth (Rushcliffe)
Hunt, John
Pink, R. Bonner


Cockeram, Eric
Hutchison, Michael Clark
Powell, Rt. Hn. J. Enoch


Cooke, Robert
Iremonger, T. L.
Price, David (Eastleigh)


Coombs, Derek
Irvine, Bryant Godman (Rye)
Proudfoot, Wilfred


Cooper, A. E.
James, David
Pym, Rt. Hn. Francis


Cordle, John
Jenkin, Patrick (Woodford)
Quennell, Miss J. M.


Corfield, Rt. Hn. Frederick
Jesse], Toby
Raison, Timothy


Cormack, Patrick
Johnson Smith, G. (E. Grinstead)
Ramsden, Rt. Hn. James


Costain, A. P.
Jones, Arthur (Northants, S.)
Redmond, Robert


Critchley, Julian
Jopling, Michael
Rees, Peter (Dover)


Crouch, David
Joseph, Rt. Hn. Sir Keith
Rees-Davies, W. R.


Crowder, F. P.
Kaberry, Sir Donald
Renton, Rt. Hn. Sir David


Curran, Charles
Kellett, Mrs. Elaine
Rhys Williams, Sir Brandon


Dalkeith,
Earl of Kershaw, Anthony
Ridley, Hn. Nicholas


Davies, Rt. Hn. John (Knutsford)
Kilfedder, James
Ridsdale, Julian


d'Avigdor-Goldsmid, Sir Henry
Kimball, Marcus
Roberts, Michael (Cardiff, N.)


d'Avigdor-Goldsmid, Maj.-Gen. Jack
King, Evelyn (Dorset, S.)
Roberts, Wyn (Conway)


Dean, Paul
King, Tom (Bridgwater)
Rossi, Hugh (Hornsey)


Deedes, Rt. Hn. W. F.
Kinsey, J. R.
Rost, Peter


Digby, Simon Wingfield
Kirk, Peter
Royle, Anthony


Dixon, Piers
Kitson, Timothy
Russell, Sir Ronald


Dodds-Parker, Douglas
Knight, Mrs. Jill
St. John-Stevas, Norman


Douglas-Home, Rt. Hn, Sir Alec
Knox, David
Scott, Nicholas


Drayson, G. B.
Lambton, Antony
Scott-Hopkins, James


Dykes, Hugh
Lane, David
Sharples, Richard


Eden, Sir John
Langford-Holt, Sir John
Shaw, Michael (Sc'b'gh &amp; Whitby)


Edwards, Nicholas (Pembroke)
Legge-Bourke, Sir Harry
Shelton, William (Clapham)


Elliot, Capt. Walter (Carshalton)
Le Marchant, Spencer
Simeons, Charles


Elliott, R. W. (N'c'tle-upon-Tyne,N.)
Lewis, Kenneth (Rutland)
Sinclair, Sir George


Emery, Peter
Lloyd, Ian (P'tsm'th, Langstone)
Skeet, T. H. H.


Eyre, Reginald
Longden, Gilbert
Smith, Dudley (W'wick &amp; L'mington)


Farr, John
Loveridge, John
Soref, Harold


Fell, Anthony
McAdden, Sir Stephen
Spence, John


Fenner, Mrs. Peggy
MacArthur, Ian
Sproat, Iain


Fidler, Michael
McCrindle, R. A.
Stainton, Keith


Finsberg, Geoffrey (Hampstead)
McLaren, Martin
Stanbrook, Ivor


Fisher, Nigel (Surbiton)
Maclean, Sir Fitzroy
Stewart-Smith, D. G. (Belper)


Fookes, Miss Janet
McMaster, Stanley
Stodart, Anthony (Edinburgh, W.)


Fortescue, Tim
Macmillan, Maurice (Farnham)
Stoddart-Scott, Col. Sir M.


Foster, Sir John
McNair-Wilson, Michael
Stokes, John


Fowler, Norman
McNair-Wilson, Patrick (NewForest)
Stuttaford, Dr. Tom


Fox, Marcus
Maddan, Martin
Sutcliffe, John


Fry, Peter
Madel, David
Tapsell, Peter


Galbraith, Hn. T. G
Marples, Rt Hn. Ernest
Taylor, Sir Charles (Eastbourne)


Gardner, Edward
Marten, Neil
Taylor, Edward M. (G'gow, Cathcart)


Gibson-Watt, David
Mather, Carol
Taylor, Frank (Moss Side)


Gilmour, Sir John (Fife, E.)
Maude, Angus
Taylor, Robert (Croydon, N.W.)


Glyn, Dr. Alan
Maudling, Rt. Hn. Reginald
Taylor, Robert (Croydon, N.W.)


Goodhew, Victor
Mawby, Ray
Tebbit, Norman


Gorst, John
Maxwell-Hyslop, R. J.
Temple, John M.


Gower, Raymond
Meyer, Sir Anthony
Thatcher, Rt. Hn. Mrs. Margaret


Grant, Anthony (Harrow, C.)
Mills, Peter (Torrington)
Thomas, John Stradling (Monmouth)


Gray, Hamish
Miscampbell, Norman
Thomas, Rt. Hn. Peter (Hendon, S.)


Green, Alan
Mitchell,Lt.-Col.C.(Aberdeenshire,W)
Thompson, Sir Richard (Croydon, S.)


Grieve, Percy
Mitchell, David (Basingstoke)
Thorpe, Rt. Hn. Jeremy


Griffiths, Eldon (Bury St. Edmunds)
Moate, Roger
Tilney, John


Grylls, Michael
Molyneaux, James
Trafford, Dr. Anthony


Gummer, Selwyn
Money, Ernie
Trew, Peter


Gurden, Harold
Monks, Mrs. Connie
Tugendhat, Christopher


Hall, Miss Joan (Keighley)
Montgomery, Fergus
Turton, Rt. Hn. R. H.


Hall, John (Wycombe)
More, Jasper
van Straubenzee, W. R.


Hall-Davis, A.G.F.

Vaughan, Dr. Gerard


Hamilton, Michael (Salisbury)
Morgan, Geraint (Denbigh)
Vickers, Dame Joan


Hannam, John (Exeter)
Morgan-Gibes, Rear-Adm.
Waddington, David


Harrison, Brian (Malden)
Morrison, Charles (Devizes)
Walder, David (Clitheroe)


Harrison, Col. Sir Harwood (Eye)
Mudd, David
Walker, Rt. Hn. Peter Worcester)


Harvey, Sir Arthur Vere
Murton, Oscar
Walker-Smith, Rt. Hn. Sir Derek


Haselhurst, Alan
Nabarro, Sir Gerald
Wall, Patrick


Havers, Michael
Neave, Airey
Walters, Dennis


Hawkins, Paul
Nicholls, Sir Harmar
Ward, Dame Irene


Hayhoe, Barney
Noble, Rt. Hn. Michael
Weatherill, Bernard


Heath, Rt. Hn. Edward
Normanton, Tom
Wells, John (Maidstone)


Heseltine, Michael
Onslow, Cranley
White, Roger (Gravesend)


Hicks, Robert
Oppenheim, Mrs. Sally
Whitelaw, Rt. Hn. William


Higgins, Terence L.
Osborn, John
Wiggin, Jerry


Hiley, Joseph
Owen, Idris (Stockport, N.)
Wilkinson, John


Hill, John E. B. (Norfolk, S.)
Page, Graham (Crosby)
Woodhouse, Hn. Christopher


Hill, James (Southampton, Test)
Page, John (Harrow, W.)
Woodnutt, Mark


Holland, Philip
Paisley, Mr. Ian
Worsley, Marcus


Hordern, Peter
Pardoe, John
Wylie, Rt. Hn. N. R.


Horney, Richard
Parkinson, Cecil (Enfield, W.)
TELLERS FOR THE NOES:


Hornsby-Smith Rt.Hn.Dame Patricia
Peel, John
Mr. Walter Clegg and


Howe, Hn. Sir Geoffrey (Reigate)
Percival, Ian
Mr. Keith Speed.

The Chairman: I think it would be safer if I read the next two Amendments which we are taking together, in case hon. Members have not got their sheets. They are Amendments Nos. 4 and 5 standing in the name of the hon. Member for Honiton (Mr. Emery) and his right hon. and hon. Friends. They are:
Amendment No. 4:
Clause 1, page 1, line 15, after "on" insert:
for a limited time which shall expire on 31st December 1975, save as is provided in subsection (2) of this section".
Amendment No. 5:
Clause 1, page 1, line 19, at end insert:
(2) The period during which a Minister may carry on any undertaking acquired under Section 1 of this Act may be extended for further periods of 12 months by a resolution which shall be subject to the approval of the House of Commons.

10.30 p.m.

Mr. Emery: I beg to move Amendment No. 4, in page 1, line 15, after "on" insert:
for a limited time which shall expire on 31st December 1975, save as is provided in subsection (2) of this section".
First, it must be made absolutely clear that in dealing with a terminal date for the acquisition we, on this side, are just as interested in and concerned as hon. Gentlemen opposite for those people who are creditors, sub-contractors and small shareholders. It would be quite wrong, because this is and has to be a limited debate at this hour and because I have been asked to keep it fairly short—[Interruption.] I have been asked by hon. Members opposite to keep it short. [HON. MEMBERS: "No."]
The Amendment sets out to do two things. The first is to ensure that the words which we have heard from the Government are put into the Bill; namely, that this is a caretaking operation, an operation which is necessary to ensure that Rolls-Royce can continue, can survive and can be made viable. Not surprisingly, the view of many hon. Members on this side is that the company is not likely to continue to survive and be viable if it stays nationalised. Therefore, we believe that it would be extremely helpful to have a terminal date in the Bill.
A terminal date raises two problems: first, the date to be chosen; and, secondly, the powers to be given to the Minister so that the market is not rigged against him at any time of disposal.
On the latter point, we have made it clear in this Amendment and in Amendment No. 5 that the Minister can, if he comes back to the House, have an extended time to continue the holding if it is not possible to dispose of it.
We on this side have fought for six years to try to ensure that we do not have government by edict or by governmental statement. Therefore, I believe that it makes sense to have the assurances which have been given by the Government incorporated in the Bill. Unless the Minister persuades me that there is some specific reason for not doing this, it would seem that it is to the benefit of the Government and, indeed, to the benefit of what many of us stood for at the General Election. [Interruption.] We should like to have that clearly understood, because many hon. Gentlemen opposite seem to believe that we are less interested now than we were before. They are so wrong.

Mr. Bishop: On a point of order. Will you, Sir Robert, ask the hon. Gentleman to address his remarks to the Committee, so that we can all hear, and not speak to the Conservative Party conference?

The Chairman: Order. I am sorry that the hon. Gentleman should not be able to hear the hon. Member for Honiton (Mr. Emery). I was certainly hearing him as well as I should wish to hear. I thought that the whole Committee could hear the hon. Gentleman.

Mr. Emery: I was trying to address my remarks to you, Sir Robert, which I have always believed was the correct way of addressing the Committee.
I believe that by accepting the Amendment the Government will be, first, carrying out what they told the country—[Interruption.]—secondly, ensuring that this is a temporary caretaking operation; and, thirdly, ensuring that people outside, not just those who have attempted to make fun of part of this debate—[Interruption.] That laughter is indicative


of the kind of attitude being adopted by hon. Gentlemen opposite.

Mr. Gerald Kaufman (Manchester, Ardwick): On a point of order, Sir Robert. Can you do something to get silence in the Committee so that the hon. Gentleman can be heard with the respect that he deserves?

The Chairman: I think that if the hon. Member would use his undoubted influence with his hon. Friends we might get that.

Mr. Emery: I am asking the Minister whether he can give the type of undertakings which the Amendment demands. May I say to him personally that—[Interruption.]

The Chairman: Order. We are on a very serious subject, and I think that the Committee would serve the interests of Parliament best if it heard the hon. Member who has the Floor in reasonable silence. I hope that I can rely on hon. Members to help me as much as possible.

Mr. Emery: I believe that the Minister has conducted himself and the Government's business during the last week to 10 days in an exemplary manner, but I ask him to reply to one question. One problem which has not been dealt with is that to which he referred in his opening speech. My right hon. Friend talked about a negotiated price which would be fair and reasonable. We are faced with the possibility of escalation. Would it not be fair to say that the Government want to ensure that they are not buying at knock-down prices but at a price which will be negotiated between a willing seller and a willing buyer properly valuing the assets? If that is said, it will be of immense help to shareholders and sub-contractors.
I urge the Minister to consider most carefully whether he can give an undertaking that, if not now, in another place he will ensure that in the legal writing in the Bill there is spelled out the position of holding on a temporary basis for a caretaker operation.

Mr. Corfield: When I opened the debate this afternoon I referred specifically, amongst other things, to the problems of trying to strengthen the whole European aero-engine industry, and I mentioned certain possibilities, which I simply do not

think is compatible in any way with a firm date on which one should try to sell this proposed new company back to private enterprise.
I am sure my hon. Friend will agree that very often nothing is more permanent than the temporary. To write in "on a temporary basis" is clearly no good without a date, and I do not think it is true to say that one gets away from the problem of the market being rigged against one by putting in a provision by which a date can progresively be moved forward.
Equally, this might well be a definite disadvantage to trying to arrange a stronger European aero-engine industry across the frontiers. Of course I do not like having to nationalise any more than my hon. Friend does. It would be the Government's intention to bring in the maximum private participation as soon as is practicable.
It is only fair to emphasise that I regard it as essential to keep open the options which I mentioned, and I would find the Amendment very inhibiting. I hope that my hon. Friend will accept my assurances.

Mr. Emery: On the reasoning about the possibility of a European factor, which obviously must be a major consideration in everyone's mind, I would ask leave of the House to withdraw the Amendment.

The Chairman: Is it the pleasure of the Committee that the Amendment be withdrawn?

Hon. Members: No.

Amendment negatived.

Question proposed, That the Clause stand part of the Bill.

10.45 p.m.

Mr. John Stokes: I shall not detain the House for long. I have waited for a long time to speak, and I shall speak from knowledge and experience—[Interruption.]

The Chairman: Order. Will hon. Members please remain quite quiet so that the hon. Gentleman who has the Floor and who is a new Member has every possible chance to be heard?

Mr. Stokes: Thank you, Sir Robert. I must make it clear that this is not my maiden speech. It is my third speech,


and, therefore, I am prepared to give and take.
I do not believe that the Government had any alternative to nationalising at least those parts of Rolls-Royce which directly affect our national defences. The Conservative Party—I have studied its history for many years—has always been pragmatic and I do not consider that party dogma has any place in the present critical situation. The essential action which we are taking should have the support of the whole House of Commons.
A subject which has not been mentioned so far is the management of the company, which is vital, whoever owns it. We all know that the present disaster was a stern and terrible warning to the country. It was a lesson for Governments that exports alone are no good unless the firm makes profits first. All parties were to blame for the ecstatic welcome which they gave the Lockheed contract. and politicians do not always have the best judgment in commercial matters.
I do not wish now to blame the previous Minister, but the fashionable worship of technology which we heard in his day is, I hope, a thing of the past, for unless technology can be harnessed to business enterprise it is useless. There are always dangers for private enterprise firms where Government money appears to be on tap, and this non-competitive element must have entered into the thinking of both managers and workers. [Interruption.]

The Chairman: Order. I ask hon. Members please to observe reasonable silence so that the hon. Gentleman can be heard.

Mr. Stokes: I believe that there are also lessons for the trade unions that workers, however devoted and able—we know that many of the Rolls-Royce workers are—cannot go on expecting endless rises in pay where productivity and profits do not follow suit and that profits, far from being a dirty word, are essential for furture growth and development, and particularly so in a science-based industry which requires a massive amount of research and development.
It is, however, on the lessons for management that I shall concentrate above all else tonight, because I believe

that these lessons may also, unfortunately, apply to two or three other large firms in Britain. I do not believe that it was the one disastrous contract which broke the back of Rolls-Royce. I fear that it may have been only the last straw in the way in which the company had been managed for many years, certainly since 1961. I do not claim inside knowledge, but from my common sense and experience in industry, and from what I have heard from many suppliers to Rolls-Royce who have known that company well for many years in my constituency, in any disaster the men at the top must be to blame. If they are to blame they should go. I have no doubt, unfortunately, that many heads will have to roll at headquarters. This may be a harsh judgment. But it happens in war if a general loses a battle, and the same should apply in business.
We are told that there is new management. But how many are new? Many of the old management must still be there. The outside directors, who should have acted as watchdogs, seem especially worthy of censure.
The first task of the greatest importance for the Government and their advisers is to choose a chief executive for the enterprise, together with new directors and managers, not only in financial control but in the commercial and production departments, and in control of research and development, which is always difficult and where an axe has to be handled. A hard look must be taken at the way the company is run. I speak with sincerity. Worship of techniques is the curse of modern industrial management. It is the men who matter. Systems are only secondary.

Mr. Bob Brown: Is it in order that, during the most interesting speech which the hon. Gentleman is making, a sub-committee of the 1922 Committee should be holding a meeting above the Gangway?

The Chairman: It is in the best interests of Parliamentary decorum for hon. Members to be as quiet as possible so that the hon. Member speaking should be heard. I was hearing the hon. Gentleman fairly well and I thought that the rest of the Committee were. But if hon. Members feel that other hon. Members ought to observe a little more silence, perhaps that might be a good thing.

Mr. Stokes: I was trying to make the point that specialist staff, management services, corporate planning, economic advisers, systems of all kinds and computers are not a panacea and can never be an excuse for faulty judgment at the top. When industry was small and owners used their own money, they had a discipline which some modern managers lack. Over the weekend I heard that repeatedly in my constituency, where the firms are still mainly small and overstaffing by functional specialists is not allowed. One hard-headed and practical man at the top of an enterprise is worth a host of sophisticated advisers.

The Chairman: I am sorry to interrupt this very interesting philosophical speech, but it is a little wide of Clause 1 of the Bill. If the hon. Gentleman agrees that hon. Members will feel that, perhaps he would like to come to a conclusion.

Mr. Stokes: The lesson in Rolls-Royce is that technical excellence alone is not enough. It is useless and even dangerous if an enterprise is not directed by business considerations. If war is too serious a business for the soldiers, perhaps an engineering company is too serious a business for the engineers. I do not mean to give pain to the countless devoted engineers of Rolls-Royce but something more than technical skill is required in business. These are the lessons of the Rolls-Royce crash.

Mr. Wilkinson: I have worked in aircraft and flown aircraft, and I represent a city where aeroplane engine components are made. I do not believe that the RB211, brilliant a project as it is, is essential to the survival of our engine industry. The fact is that it was very good but very late, and that is a factor which will not win orders in the hard world of commerce.
We cannot hope to maintain a strong engine industry without a strong British airframe industry. If there is another lesson which we can learn for the future, it is that British power plants can be developed only on the basis of the availability of British airframes in which to put them.
The right hon. Member for Bristol, South-East (Mr. Benn) is still totally wedded to Plowden. I thought that Plowden had been exploded long ago. I remember the classic phrase in the

Plowden Report about there being no predestined place for an aircraft industry in Britain. I believe that there is a future for our aircraft industry, as do the many fine people who have lobbied us today. That is why my right hon. Friends have had the courage to overcome ideology and bring forward this Bill.
We are not the only country to renege on our responsibilities. [Interruption.] Right hon. and hon. Gentlemen opposite roll in their seats, but in other less privileged parts of the country people stand to lose their jobs. This is not a matter for hilarity. The example to which I was about to refer is the United States, our great friend and ally, which welshed on the Skybolt and put our whole defence posture and strategic deterrent at risk. The U.S. Government also offered us the F111, at a prodigious price and late. Quite rightly, right hon. and hon. Gentlemen opposite decided that it was not suitable. The TSR2 was suitable, but they had already turned that down.
We must not take a great leap in the dark in technology. That is another point all too often forgotten by the right hon. Member for Bristol, South-East, whose enthusiasm I admire but whose judgment I do not always respect. In order to make profits, it is essential to produce a policy of product improvement. The trouble with Rolls-Royce is not only that the RB211 is too far ahead of its time——

Hon. Members: Too late!

Mr. Wilkinson: It is a great money spinner——

Hon. Members: Too late!

Mr. Wilkinson: It is ahead of its time compared with its American counterpart—

Hon. Members: Too late!

Mr. Wilkinson: It is ahead but only in design. The American engines are heavier, fatter, smokier, noisier and thirstier—rather like right hon. and hon. Gentlemen opposite.
I am very pleased at my right hon. Friend's courage, because there are other projects, important projects, on which our nation depends. There is the RB199, another three-shaft engine, very advanced, with immense possibilities and overseas sales potential. There is the Adour, the


further development of which is going well, though, as my right hon. Friend reminded us, it needs still further development. Then there is the Pegasus, the thrust of which could be augmented 100 per cent. These are all valuable projects which——

The Chairman: Order. We must try to keep to the terms of the Clause.

Mr. Wilkinson: Ideology, whether it be that expressed in Amendments Nos. 1, 3, 4 or 5, will not serve the country best. I believe the Measure which we have debated today will, and I commend it to the House.

11.0 p.m.

Mr. G. B. Drayson: The Clause would give the Government power to acquire certain undertakings and assets of Rolls-Royce, and I am very glad to think that it will enable the Government to acquire the Rolls-Royce factory at Barnoldswick in my constituency, which has been responsible for all the development work and the production of the prototype of the RB211.
It may not be generally realised that we were responsible at Barnoldswick also for the development work on the Derwent, the Clyde, the Avon, the Conway and many others. I speak, therefore, with some feeling on this, the effective Clause of the Bill, since several thousands of my constituents are vitally concerned.
I was glad—I know that my constituents will be—to know that it is the Minister's intention to continue the RB211 production programme for another four weeks, while the contract can be renegotiated with Lockheed. We all wish the Government every success in that project.
The factory to which I have referred, which will be affected directly under the Clause, is known as an experimental manufacturing unit. All those who work and have been working there on the RB211 are sure that the engine can be made both a technical and a commercial success. At this point, I thank the Minister very much for seeing a party of shop stewards from my Rolls-Royce factory only yesterday afternoon, when they were able to tell him of the amount of hard work and overtime they have put in in trying to bring the project to fruition.
It was because of the high technical skills and ability of the teams built up at the Barn oldswick plant that my constituents were given the job of producing the prototypes of the RB211 engine which were flown at Hucknall—we had a reference to that earlier—and the engines which went out to California and were used in the Lockheed airframes there.
We all hope that the fine assets at Barnoldswick will be among the assets which the new Rolls-Royce company will acquire. I was most pleased yesterday when the Minister gave an assurance that someone would come and familiarise himself with what as going on in my constituency, and would see the plant before any final decisions were made. I would like to think that the Clause enables the Minister to acquire some of the liabilities which have been incurred by the subcontractors, because many of them, particularly in my constituency, are extremely worried about the position.
I conclude by saying that all is not lost; that, while this is undoubtedly a tragedy, I hope it will not turn into a disaster, and although it may be said that Rolls-Royce is bust, we can say, "Rolls-Royce is bust—long live Rolls-Royce"; and I think that in its new form, and with that part of the business in my constituency still running, it still has a tremendous future.

Mr. James Kilfedder: I intend to speak for only two minutes. First of all I wish to say, as an Ulster Unionist, that I cannot comprehend the doctrinaire attitude of some hon. and right hon. Members. I cannot understand why some hon. Members opposite feel that Rolls-Royce should not be sold back to private ownership. At the same time, I do not share the distaste which has been expressed by some of my hon. Friends about Rolls-Royce being taken into public ownership. I certainly could not agree with my hon. Friend the Member for Hendon, North (Mr. Gorst), who said that the State should not involve itself in commercial risks. Of course it must, on occasions. There have been splendid examples of that in the past, and I hope that Governments in the future will take on commercial risks when necessary, and when the national prestige is involved.
As the only Ulster Unionist who has a Rolls-Royce factory in his constituency, I would emphasise the concern, which


has already been expressed by hon. Members who have Rolls-Royce factories in their areas, about the future of these employees. The Rolls-Royce factory in Dundonald was established in 1966, through inducements, no doubt, from the Stormont and Westminster Governments. It is a spendid factory. I saw a number of trade unionists last Saturday and today, and they assured me of the viability of that factory, and I hope that the Government will preserve it. It manufactures exclusively Code F items, not only for the RB211 but also other aero-engines used by civil airlines and military air forces, too. That factory produces 33 per cent. of the items for the RB211. Rolls-Royce sub-contracts Code F items, and if those were placed at the Dundonald factory, then not a single employee there need be made redundant.
I rose only to express my concern about that factory, and to ask for an assurance from the Government that, come what may, that Rolls-Royce factory in my constituency will be preserved.

Mr. Dalyell: Before turning to my own problems, with now 18 per cent. unemployment in Livingston new town, I should like, without in any way wanting to make mischief—I see present the hon. Member for Belfast, East (Mr. McMaster)—to ask a few rather genuine questions about Short Brothers & Harland. I do not know the affairs of that firm as intimately as does the hon. Gentleman, but it is certainly the impression of some of us that it is not only the medium-sized sub-contractors who are owed a great deal of money by Rolls-Royce.
Part of the reason why some of us were earlier making such a fuss about wanting the Solicitor-General with us is that long-term decisions necessarily have to be made in a hurry—perhaps tomorrow, perhaps on Monday. My hon. Friends the Members for Dudley (Dr. Gilbert) and Birmingham, All Saints (Mr. Brian Walden) and other hon. Members with whom I have discussed the matter know that there is an urgent problem facing us, and that time is not on our side.
The story of the Cameron Iron Works at Livingston—the largest in the world—is perhaps typical in that, like other firms, we are geared to TriStar, and to Concorde and the Harrier as well. If I do

not go into details it is simply that many hon. Members have precisely the same problems in their constituencies, and enough has been said about that. I simply present my credentials for asking questions, if I may, of the Fnancial Secretary to the Treasury, whom I must praise for having been here for a very large part of the debate. If we have certain criticisms to make about certain other Ministers, it reflects great credit on the Financial Secretary that he has been here almost throughout the debate. So, without being unduly earnest, I should like to address some questions to him.
The Solicitor-General said that suppliers need not reach adverse conclusions. A number of suppliers will ask me and some of my hon. Friends why they should not reach adverse conclusions. On what basis is it suggested that they should not do so? From all that has transpired in the last six hours here, there seems to be little optimism on which to base any other kind of conclusion. Perhaps the Financial Secretary would like to intervene now?
Next the Solicitor-General said that it would depend on the overall position of each of the suppliers—that was one of the criteria. What is meant by the "overall position"? Does it mean that those who are heavily committed are in some way to be treated differently from those with only small commitments? I simply ask for an explanation of what the hon. and learned Gentleman meant by saying that "action will be taken on the dependence on the overall position of each of the suppliers". Would the Minister now like to intervene? I ask, because some of us will have some very difficult questions to answer on Saturday, Sunday and Monday from many people.
The Solicitor-General next said that there was no reasonable prospect of the creditors being paid. Who is to determine what is or what is not a reasonable prospect? Who is to judge that? If the P.P.S. is giving the Minister information I will, of course, give way, because these are urgent questions that many hon. Members will be asked.
Again, without undue repetition, may we return to what was said by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan)? He raised some important questions about Section 332 of the Companies Act. I do not blame the


Parliamentary Secretary for not answering them in detail, but I hope that now that the House is quieter and emptier he will take the opportunity of answering in some detail the issues raised by my hon. Friend the Member for Craigton.
11.15 p.m.
I come now to the speech of the hon. Member for Bradford, West (Mr. Wilkinson). He said that this was a very good engine, but very late. Is that the view of Her Majesty's Ministers? Some of us would say that comparisons have to be made about lateness. What does lateness mean? It is relative—and, relative to what Pratt and Whitney or General Electric could do, this engine is not late. Surely it is on this issue of comparability that the lateness or otherwise of the engine must be judged. It seems that renegotiation in terms of time is still possible, and I should like to know the view of the Minister on that issue.
My hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers) may recollect that I interrupted him when he was speaking about possible bidders. The Minister used the phrase "any acceptable bidder". It would help us if the word "acceptable" was defined. On what criteria is it acceptable? On whose judgment? These are questions that many serious people will be asking.
Some of us represent international companies, many of them based in the United States. We are having to go home to face American executives, some of whom have flown over in a hurry as a result of this crisis, and we want to know what we shall say to them about our country. They think that this is an act of infinite perfidy. I interjected "banana republic". It was not my phrase; it was the phrase of an important American executive, respected by certain hon. Members opposite from Scotland—a man who has been a friend of this country, and has invested a great deal of his money in it. He is owed millions of dollars by Rolls-Royce.
These are the people whom we must face over the weekend. They are the people who think that this has been an act of perfidy—who cannot believe that a British Government can have done this thing. I am merely asking what we should say to them when they confront us and ask whether this is really in the British tradition.

Mr. Stanley R. McMaster: I do not intend to detain the Committee for more than a few moments. I want to answer the points raised by the hon. Member for West Lothian (Mr. Dalyell).
This has been a confusing debate. In my constituency in Northern Ireland much concern is felt about the point raised by many hon. Members opposite regarding the position of creditors. A great deal of nonsense has been talked by hon. Members opposite, and particularly by the right hon. Member for Bristol, South-East (Mr. Benn). They seemed to suggest that the Government should have given an open-ended undertaking to Rolls-Royce that no matter what the cost of these engines turned out to be they would keep the company going; that, even if Lockheed itself was insolvent, Rolls-Royce would be kept going at all costs, and the engines, having been built at the expense of our taxpayers would be supplied at below their true cost to the American aircraft industry. That is not a sensible suggestion.
On the other hand, my right hon. Friend the Minister of Aviation has got himself into considerable difficulty over the valuation of the assets. I should like my right hon. Friend, in reply, to give some indication of the way in which the assets will be valued. This would place the creditors in the position that all Members who have spoken in the debate have sought.
If the Government are able to renegotiate the Lockheed contract they will be in a peculiar position, because they are wearing two hats in the negotiations. On the one hand, they are acting as bankers so that Rolls-Royce can carry on for another four weeks, so that time is allowed to renegotiate the contract and Rolls-Royce can be sold to the Government at perhaps a higher price than if they did not advance this money and the contract were immediately to fall. They are apparently, when wearing the banker's hat, acting against their own interest. But as the Government interest has been clearly stated to keep Rolls-Royce as a going concern, then in buying the assets they can perhaps treat them at historic cost, less depreciation.
But I suggest that that is not the appropriate method of valuing assets in this case. The correct way would be to


appoint independent valuers to value the property, land, plant and machinery at replacement cost and add to this a value which also can be supplied by an independent valuer of the goodwill of the concern. This would be paid to the Receiver and should be sufficient to secure the debts of the creditors, both secured and unsecured—the ordinary trade creditors—so that they would know where they stood and be in a position to carry on in business.
The Bill is, apparently, a blank cheque. The Financial Memorandum says
It is not at present possible to make any reliable estimate"——

Mr. William Molloy: I find it confusing when two hon. Members who, I understand, are Ulster Unionists advocate different approaches. Notwithstanding the asinine remarks which the hon. Gentleman made about my right hon. Friend the Member for Bristol, South-East (Mr. Benn), will he try to help us to understand why his argument is almost completely and absolutely diametrically opposed to that of the argument advanced by his colleague from Northern Ireland, the hon. Member for Down, North (Mr. Kilfedder)?

Mr. McMaster: The hon. Gentleman has not been following. I am not addressing myself to the arguments put forward by my hon. Friend the Member for Down, North (Mr. Kilfedder). There is nothing inconsistent in what I am saying. My hon. Friend and I are both concerned about the employment position in Northern Ireland and the position of the creditors.
There is a duty on the Government before the debate closes to give an indication to the House, and, therefore, to the country, of the way in which they will estimate the price to be paid for Rolls-Royce so that the creditors of the company in Northern Ireland and elsewhere will have some idea of how the sum is to be arrived at and, therefore, whether there will be enough money to pay them.

Dr. Gilbert: Now that some of the passion of the day is spent, perhaps we can get from the Minister some serious answers to some serious questions.
First, have the Government yet made any survey of the number of sub-contractors and suppliers of Rolls-Royce who will be affected by this decision? Secondly, does the Minister have any idea of the number of men who will be thrown out of work as a result of this decision? If he has those figures, will he give them to the House as soon as possible?
Can the Minister also confirm that there is in the Rolls-Royce group an intricate network of corporate relationships, and that the receiver cannot ignore the corporate significance of this network when he is distributing the funds that come from the assets that the Government are buying from the group? Can he further say with which company or companies in that group Lockheed has stood in a contractual relationship, and how many firms of British domicile also stand in the relationship of creditor to those companies with which Lockheed had a contractual relationship?
Can the Minister say anything about the total amount of debts owed by those companies in the group as a proportion of the total debts of the Rolls-Royce group so that we can have some idea of what is involved as far as Lockheed is concerned?
I imagine that the Minister will accept—it is hardly beyond dispute—that the principal objective of this sorry exercise has been to welsh on the Lockheed contract. Let us abandon the fiction that the Government and the receiver are completely at arm's length, because his hon. Friend said earlier this evening, "The receiver will be acting in close accordance with our views".

Mr. David Price: With qualification. This concerned a question over the sale of assets. I said that in the case of a new contract with Lockheeds it was necessary for the receiver to be indemnified. That was the point. That is not in accord with the line the hon. Gentleman is taking. It concerns the particular case of a new contract with Lockheeds. If one should arise before the new company comes into operation the Receiver can negotiate in accordance with our views, provided that he is indemnified.

Dr. Gilbert: I am grateful for what the hon. Gentleman has said, which makes it clear that it will not be the Receiver's policy—because he will not be


under the influence of the Government—in any way to discriminate in favour of British suppliers as against Lockheed. Therefore, Lockheed and the British suppliers, unsecured creditors, will have to be taken on all fours, and so the greater the degree to which the Government can welsh on the Lockheed deal the worse off will be the British suppliers. That seems to be axiomatic in the situation.
A further problem, as explained from the Government Front Bench, is that we do not know at this stage what the total liabilities will be with respect to Rolls-Royce before 4th February, 1971, as it will necessarily take a long time to ascertain what the total liabilities will be when penalty clauses, damages and so on are taken into account. Will the Government therefore give an undertaking to try to make an out-of-court settlement as soon as possible of any claims for damages that will arise for non-performance of these contracts?
Are we to understand, as seems to be clear from the debate earlier, that the price to be negotiated with the Official Receiver is totally exclusive of any considerations of the costs arising from the penalty clauses? The considerations in determining the price, I understand, will be purely and simply related to the value of the assets, whatever the basis of valuation is to be.
The sub-contractors have no idea how many shillings in the pound they will get on their debts, if any, and who will get them. The whole question of the interlocking corporate relationships that I mentioned earlier is very significant in this respect.
11.30 p.m.
Therefore, we have the problem that it will be a long time before the receiver is in a position to make any distribution in favour of the unsecured creditors. The creditors must have some idea as soon as possible of what amount in the £ they are likely to get. It is no good the Government simply saying that commercial bank credit will be available to firms strapped for funds in the short run. A great many firms are highly dependent on Rolls-Royce business. What bank in its right mind—and I sometimes wonder whether any bank in this country is in its right mind—will lend funds to a medium or small sized engineering company

whose biggest asset is a bad debt from Rolls-Royce? But without such funds they will go out of business.
The real problem—which has not been mentioned by the Minister—is that if these sub-contractors go out of business there is simply no point in trying to keep Rolls-Royce in business. The whole operation is vitiated. He is floundering around with blinkers on, looking at one segment of the problem. Unless he looks at the thing in the round and tries to do something urgently for the sub-contractors, there is no point in going on with the other side. Rolls-Royce is dependent on them for supplies of specialised materials and specialised work, and the sooner the hon. Gentleman realises this, the better, otherwise he will be in an even worse position.

Mr. Eddie Griffiths (Sheffield, Brightside): There is another very important point. How could the reconstituted Rolls-Royce firm go back to these sub-contractors to whom it owes, in some cases, £1 million or more, and ask, "Will you supply us with specialised equipment?"

Dr. Gilbert: I am grateful to my hon. Friend for that point. The vice-chairman of a company in my constituency asked me this week, "Why should I supply the receiver with materials under this new set-up? Why should I not hold him to ransom in order to try to get my money out?" It is difficult to give him an answer in the affirmative.
On the other hand, let us be clear that a great many of these sub-contractors, unless they get an assurance of money in the near future—something of the order of 15s. or more in the pound—will be in dead trouble. But the more generously the Government treat the sub-contractors, the more they have to pay Lockheed. So the whole thing was pointless in the first place.
Another point concerns the pension position. It has not been touched on so far, and if the Minister cannot give me information about it tonight I shall understand and shall put Questions down. Is he in a position to give information now about the pensions position, not just of the former employees but of the former board of di rectors and the existing board of directors? Can we know what arrangements are being made for the board of directors as constituted on 4th February,


1971? Can we have an assurance that no public funds will be made available for pension or separation allowances for the board of directors while the ordinary working people in Rolls-Royce are suffering from the erosion of share values in their pension funds? It would be monstrous if the directors got away scot-free with their £20,000 or more while ordinary people on the shop floor got strapped once again.
The Government are technically right in that they were not party to the contract between Lockheed and Rolls-Royce; but in the eyes of the rest of the world they were, and they know it. If the Government do not know it, I can tell them that salesmen for Japanese, German and American firms are going to be telling our customers about it all over the world from now on for months ahead.

[Mr. HAROLD GURDEN in the Chair]

Sir Harmar Nicholls: Is the hon. Member telling the Committee that his right hon. Friend the Member for Bristol, South-East (Mr. Benn), when he had full power, committed this country to the extent that the hon. Member is now suggesting?

Mr. Benn: I cannot speak for my hon. Friend, of course, but, as the question has been put, may I say that I think that my hon. Friend the Member for Dudley (Dr. Gilbert) is confusing the legal obligation which lay between the companies and the good name of this country which became involved because we were a partner. I only wish that the Prime Minister devoted 1 per cent. of the time which he devotes to our alleged obligation to supply arms to South Africa to the moral obligation to see this deal through in the United States, as that would reflect very much better on this country.

The Temporary Chairman: That is not in the Clause.

Dr. Gilbert: Before the General Election we were promised by the Conservatives that if they were returned to power there would be a "new style of Government"; we certainly have a new style of Government; for the first time, we have a Government of welshers, and I defy an hon. Member opposite to deny that. We were told that we were to have as

Prime Minister "a man of principle". I wish he had been here tonight; he has not been here for a moment throughout the debate. His principles extend far enough to make sure that 6d. is taken off the tax for his surtax-paying friends, but he does not have time for the thousands of people thrown out of work by this disgraceful decision.

Mr. Barnett: I should like the Minister to deal with a matter which I raised earlier. His last recorded statement in the House was that the £42 million was to be made available regardless of the accountant's report. I am sure that he will agree that that is what he said in answer to me when I asked a question following his statement. He then corrected that statement in a private letter to me, a letter which, of course, will not have been read by the creditors and suppliers, and I asked him whether he would correct the statement in the House, as it was so important. He refused to do so. That leaves creditors and suppliers with the last statement by the Minister being that the £42 million was to be supplied regardless of the accountants' report.
I then asked the Leader of the House to ensure that the Minister made a statement so that he could correct the misleading statement which he had previously made. I imagine and accept that it was made by accident, although I asked in correspondence for it to be corrected, pointing out how serious it was, although not thinking that it was as serious as this. It means that there could well have been suppliers who gave additional credit on the understanding that there was £42 million additional money provided by the Government. This is a serious matter, and in other circumstances people would be brought before the court over it. I hope that the Minister will answer that this evening.
I do not want to apportion blame prior to all this happening. My own experience as an accountant is that bankrupts are all too ready to blame the Government, bankers for being so stupid as to lend them money, suppliers, customers, workers, lawyers and even their accountants. They are prepared to blame everybody, or at the end of the day say that they were just plain unlucky. It is never a very pleasant picture when these things happen.


But there is generally one strand running through it all, one thing which they all have in common—that the blame rests primarily on the bankrupts, because if they did not know what was happening, they should have known, and generally they were closing their eyes to the situation. But that is in the past; it is solutions with which we need to concern ourselves.
One has to ask whether the Government's solution is necessarily the best. The way they have chosen is nationalisation without compensation, and I hope that they recognise the sort of example which they are setting. It is an interesting example of nationalisation without compensation, not only without compensation to the shareholders but, so far as one can see, very little for the unsecured creditors, unless the Government are prepared to say what they have not said all day to satisfy the sub-contractors—that they are prepared to buy Rolls-Royce as a going concern rather than at break-up value. In that way the sub-contractors would be in a much stronger position than if they went on anything said by the Solicitor-General.
In having to decide whether to do what Rolls-Royce did under Section 332 the sub-contractors are in a much worse position. Rolls-Royce had net tangible assets of £200 million. The sub-contractors will not have anything remotely like that. They will have, largely, a bad debt, and if they are told that the Government intend to take over whatever it is they are to take over as a going concern and not to steal the assets, then it will mean that the sub-contractors can feel assured that in carrying on trading they are likely to be paid a reasonable proportion of their debt.

Mr. Dalyell: I could not help noticing the Minister nodding his head. Could we have his explanation at this point?

The Temporary Chairman: Order. We cannot have an intervention on an intervention.

Mr. Barnett: I will rise again but will happily give way to the right hon. Gentleman if he wishes to make it clear to sub-contractors that they are likely to get money on the basis of payment by

the Government as a going concern rather than on break-up values.

Mr. Corfield: I am sure the hon. Gentleman realises that I am not a professional valuer, but, as I understand it, those sections that form a trading unit will be valued either on the basis of a going concern or, if another form of valuation gives a higher price, then on that one. There might be a situation when the land occupied by a small factory was more valuable than the factory and it might be more profitable to market it on the basis of the land rather than as a going concern. In that case the Receiver would be entitled to claim the higher figure. Clearly, he has an obligation; he is in a position of trust in exactly the same way as those who negotiated on behalf of the company. As I visualise it the greater part will be on the basis the hon. Gentleman mentions, as a going concern. There may be some small parts where another basis is more profitable.

Mr. Barnett: There is another basis, as we heard from the Parliamentary Secretary, and it is a most interesting one. A more inept method of putting it I have never heard. It is the idea that if there was a bid from elsewhere then the Government would beat that bid. This was a most interesting method of buying the business. It baffles the imagination. Lockheed's is owed a great deal of money and it is told that if it puts in a serious take-over bid of a particular price then the Government will beat it. All that Lockheed has to do—and I am sure it does not need me to tell it—is to put in a reasonable bid at a figure that will enable it to be paid out in full and the Government will have to beat it. On the basis of that statement the sub-contractors could go to their banks tomorrow and say "We can carry on trading under Section 332. We have no fears because we are bound to be paid out in full."

Mr. David Price: The hon. Gentleman exaggerates the argument. I said that if there were a foreign bidder who was a serious bidder, the Receiver would have to take it into account because it is his duty to the debenture holders. Therefore, there would have to be an adjustment in the price that the Government would have to pay. If we got to the ridiculous point


put by the hon. Gentleman it would involve a certain bidding-up, or could involve that. We have to remember the position of the Receiver.

11.45 p.m.

Mr. Barnett: I appreciate the point which the hon. Gentleman makes. I should only say in passing that the point, if it was ridiculous, was not mine, but the hon. Gentleman's.

Mr. Millan: Is it not even worse than the Minister would say? Is it not conceivable that one might have an outside bidder, like General Electric of America, which would not necessarily bid for the whole of the aero-engine division of Rolls-Royce but might wish to take over particular units? This must be well within the financial competence of General Electric. Is it not a fact that the principle enunciated by the Minister would involve him, even if only a part of the undertaking was involved, in overbidding on a General Electric bid?

Mr. Barnett: I could not agree more with my hon. Friend, who has experience of receiverships and liquidations. The receiver will be in a position, if he gets these bids, on the basis of what the hon. Gentleman said, of receiving enough from the taxpayer, whom the Government are always telling us they are there to protect, to enable all the creditors to be paid in full. I suppose, on that basis, we may take it that the sub-contractors can feel reasonably happy that they will also be paid in full.
Anybody who knows anything about the way that liquidations and receiverships work will know that what the Government have done is commercially the nastiest and most dishonourable way known of legally robbing shareholders and creditors. If the Minister does not know it, I ask him to have a word with accountants and others in practice who have seen this kind of thing happen.
Was there an alternative to what the Government have done? It is a bit late, but the country is entitled to an account of what happened. Strictly, only the company and the creditors were able to appoint a receiver or liquidator, but it is an unworthy legal quibble for the Government to disclaim responsibility. It is no use saying, in view of the connection between the Government and the company, that they did not have power to

appoint a receiver or liquidator. It is a legal quibble, and I hope that we shall not hear it again from the Government.
The argument that if the Government gave themselves room for manԓuvre, gave themselves time to decide what would be the best way before doing this untold harm, by putting in a small loan, it would render them falling foul of Section 332, which is what the Minister suggested, is complete nonsense, as any reading of the section will show to any reasonable person.
The relevant words are "intent to defraud". Can it be suggested that the Government and the board of directors were intending to defraud creditors by trying to keep the company going as a viable proposition—a company with nearly £200 million of net tangible assets at the last balance sheet date, not taking account of another £18 million of under-valuation on properties? I think that one could say there was intent to defraud the other way if the creditors are not to get much back. To suggest that the Government needed to take this precipitate action and plunge the whole thing into this nightmare—as the Minister described it—on the basis of Section 332, is a crazy situation.

Mr. McMaster: The hon. Gentleman has raised this point before. He must know, from reading the directors' statement, that the liabilities which they were likely to incur under the penalty clauses were in excess of the company's assets. When this kind of Clause comes before the court for interpretation, the court cannot examine the state of a man's mind but it applies the principle that a man is taken to intend the reasonable consequences of his act. Here the reasonable consequence of the act was the bankruptcy, and that is the end.

Mr. Barnett: I totally disagree with the hon. Gentleman. The company had two choices: either it liquidates and the unsecured creditors get very little, or it tries to keep going as a viable proposition, in which event, if it is able to renegotiate, the creditors get as much as they would have got under the liquidation and possibly get paid in full. To say that that was an intent to defraud is a nonsensical way of reading Section 332.—[Interruption.] If the hon. Gentleman disagrees with what I am saying, let him say why.

Mr. Cecil Parkinson: I ought to declare an interest, because I, too, am an accountant. The basic problem in a situation like this is to maintain confidence. The detailed position was that the directors were searching the City to pay the week's wages, and that is no way to maintain confidence in a company which has huge overseas liabilities and big contracts. If it is done for one week, it might be possible to keep the fact quiet, but if it is done for two weeks or three weeks, confidence in the company will be lost.
The directors of Rolls-Royce were searching for ways in which to pay the wages of the workers, and at the same time were trying to maintain the posture that they could fulfil a huge overseas contract. The hon. Gentleman knows that in this situation confidence is the key factor, and confidence is bound to be lost when the company runs out of cash to pay wages. That was the situation of the company.

Mr. Barnett: The hon. Gentleman is talking about a totally different thing. He is talking about——

Mr. Parkinson: I am talking about the reality.

Mr. Barnett: I accept that that was the reality of the situation. I have not denied that. The hon. Gentleman is saying that the company was illiquid, and that is right; but it was not insolvent. The hon. Gentleman should know that. He must understand that we are talking about an intent to defraud under Section 332. To say that the directors in an attempt to safeguard creditors' money were intending to defraud is a nonsense. It is no use the hon. Gentleman saying they were illiquid. I do not deny that, but that does not invalidate my point. If the hon. Gentleman thinks that he has made that point, I am sorry to disillusion him by telling him that he has not.
What are the alternatives now open to the Government? The Government's method of the straight liquidation and buying the assets only is in one sense, and the narrowest sense, the cheapest method, but it does untold harm to the purchaser, and the right hon. Gentleman said nothing further today to what he said to me in reply to a Question yesterday, when he said that he was keeping

open the option not to liquidate. I hope that he still has that option open, because I believe that there is still a possibility of avoiding a liquidation, and I should like to explain the two methods by which one can avoid a liquidation.
The first method is to try to renegotiate the RB211 contract. I do not know whether the engine is good enough, or whether the contract is good enough. The Minister may have been right on Monday, when he said one thing, or on Wednesday, or on Thursday when he said another. I am not in a position to know whether the engine is a good one. If we are successful in renegotiating this contract, there is no need to liquidate, unless it is the Government's intention to rob the creditors here, as well as Lockheeds. If the Minster does successfully renegotiate, there is no need to liquidate. I hope that the Minister will accept that.
The Minister may not be able to renegotiate successfully. I accept that it may not be possible; but in that case it should be possible to try for a composition, because, as things are under the present arrangements, the creditors will recognise that their chances of getting very much are slim. Anthony Harris in the Guardian yesterday thought that it might be 25 per cent. My experience of liquidations is that once they start, once the vultures get in, the creditors do not get very much, and certainly they would be prepared to do some kind of composition. When that is done it would be possible to take it over as a going concern without liquidation. So either way, whether or not there was successful re-negotiation, there would be this possibility.
But, at the end of the day, this has to be a hard-headed commercial calculation, and normally one would expect a Government like this to be able to make such a calculation, but one must now have some doubts, to say the least. Without going into all his figures, some of which were inaccurate, Anthony Harris in the Guardian yesterday concluded that the cost of keeping it going might be about £100 million. He made many assumptions, and I have made some myself, but even if he is wrong and it is £200 million, it would be very strange if the Government were not prepared to pay £200 million to save Britain's commercial honour, if for nothing else.


The cynical may say that that is not worth £200 million. In liquidations I have seen creditors screaming their heads off and the next day trading with the same company and giving credit. We should not, as a nation, be cynical about that that would not be pleasant—but it might be done. But, in addition to Britain's commercial honour, there is the real economic and social cost of massive unemployment, which is a genuine cost.
There is the cost of buying advanced engines from monopoly companies in the United States. There is the difficulty of trying to sell engines and advanced technology to the United States and the rest of the world, with the difficulties about delivery dates and the rest. There is the loss of the sub-contractors and the consequent loss of tax, and the social and economic cost to those sub-contractors. If any people were concerned about these small firms and their employees, I should have thought that it was hon. Gentlemen opposite.
There is also the real cost of this on the whole question of risk taking. Previously, if one were owed money by Rolls-Royce, a bank would gladly lend money against it. Now the banks will be looking with a jaundiced eye at people owed money by companies which previously one would not have dreamed of worrying about. This will have a serious effect on the general economic climate. Some of it will be calculable and some will be incalculable.
There is the question of workers' shares. I cannot see workers being happy about taking up shares in their companies, especially if they are partly paid up shares, and they are then liable in this sort of situation. Fortunately, I understand that the workers' shares in Rolls-Royce were fully paid up, but workers with partly paid up shares could be the only shareholders with a liability. So there are some serious costs in addition, which one would ignore at one's peril.
Of course, one can still assume that there is a saving of £200 million, a significant sum. The Chancellor told us on Monday that he was taking care of the taxpayers' interests. But, even if my figures are not accepted—I would have said that it was much less than £200 million, and would have liked to present figures if it were not too late—it is a

saving only in the narrowest sense. I believe that at the end of the day the taxpayer and Britain will have paid a heavier price than we yet know.

12 midnight.

Mr. Michael McNair-Wilson: Now that we are coming to the end of what is an enabling Bill to allow nationalisation to take place, one question which keeps entering my mind and which never seems to be satisfactorily answered is whether this act of nationalisation arises because Rolls-Royce is bankrupt and that it is bankrupt because the Government were not prepared to bail it out over the increasing costs of the 211 engine.
If this simple proposition is the case, as I believe it is, it is difficult to understand why my right hon. Friend continues to talk about renegotiating the contract. I should declare an interest, in that I am one of those unhappy individuals who are shareholders in Rolls-Royce. If we are to spend a large sum on Rolls-Royce and then renegotiate the 211 contract with Lockheed, surely we shall finish up at the end of the day having spent very much more money than it appears at the moment we would have had to spend to bail the engine out.
Another question which seems to be posed is: how importent is this engine? I cannot claim any technical expertise which allows me to know whether the engine is, as the right hon. Member for Bristol, South-East (Mr. Benn) said, the launching pad for a series of new technology engines or whether it is one more civil aero-engine which if Rolls-Royce does not build it will not necessarily be crucial?
The extremely reputable air correspondent of the Financial Times argued in an article in yesterday's edition that this 40,000-1b. thrust engine is the beginning of this new break-through into very much more powerful engines and that, therefore, if Rolls Royce did not build it it would not get in the big league. No doubt this question was considered by the Government, and they have decided that they should not support the project, for all sorts of commercial considerations, all of which I accept.
I should be grateful if my right hon. Friend would make it clear to me, to the Committee and to all shareholders and,


indeed, to others with interests in Rolls-Royce that the Government are not welshing, that they are not trying to get out of compensation to Lockheed. They were asked to bail Rolls-Royce out, and in their judgment, which after all is exercised on behalf of the people, they decided that the sum which they were being asked to provide—there is no particular reason why they should provide it—was too much and the risk was too great and, therefore, that it was best to let Rolls-Royce go bankrupt, with the Government picking it up in terms of nationalisation.

Mr. Dalyell: In the hon. Gentleman's genuine interest, which the House respects, in matters of perfecting airlines and aircraft in general, what does he think about the issue of having to buy aeroplanes in future across the exchanges?

Mr. McNair-Wilson: If the hon. Gentleman will forgive me, I will not explore that very long argument at this moment, although I appreciate his intervening.
I come to the question of the value of the company. Clearly, we shall need another statement as to exactly how the value of the assets will be worked out. I do not care for the concept of one bid being put on another to some astronomic figure, and I feel sure that it is not in the Government's mind. I welcome the possibility mentioned by my right hon. Friend of an arbitrator coming in between the receiver and the Government to decide what is a fair price. This is very near the point.
I want to put in a word for the shareholders. I would not go so far as to say that any of the shareholders—myself included—bought Rolls-Royce shares because we knew that there was a great deal of Government money in the company, but it is true to say that that is the situation.
The shareholders find themselves in a very curious situation, because I do not believe we have ever had a nationalisation of a bankrupt company before. The shareholders are in a position where they might have to take an arbitrary figure for the company, which may mean that they will have to take a very small figure or nothing at all. I should like to think that the Government will be able to find a way to re-float either the company or

some portion of it and that preference could be given them. There are 18,000 workers in Rolls-Royce who have shares, so it is not a question of just giving the big institutions large sums of money or preference. It means giving that to ordinary people who put quite small sums of money into the company.
How are we now to make the State-owned Rolls-Royce accountable to the public? We have heard a great deal about the problem of monitoring public expenditure in advanced technology. The right hon. Member for Bristol, South-East was very honest when he said that Ministries no longer have this capability, and that advanced technology is so advanced that only quite small numbers of people are able accurately to assess it. If that is the case, clearly we shall have to set up some sort of machinery to give the feeling at least that, on broad lines, we know what the company is up to and that its spending is roughly within the limits expected.
We can think of the RB211, and we can just as easily think of Concorde and wonder how we could start with a figure of £80 million and reach £850 million. Where does accurate monitoring come in there?
I am extremely sorry that neither the previous nor the present Government have seen fit to publish the I.R.C. Report on Rolls-Royce. It must be a document of some value. It would have helped us all today because we would have had that much more information. But I wonder whether such a distinguished accountant as Mr. Ian Morrow of Rolls-Royce was not able to get some idea of Rolls-Royce's situation soon after he was appointed. I wonder whether the RB211 is the whole story, or whether the Rolls-Royce pyramid is shaky in more ways than one. I wonder whether the Government's decision not to back the RB211 was arrived at through something in their minds about that.
I will not admit for one second that we on this side of the Committee have any intention of welshing on any obligations. That is a good attack to make on us, but we are not nationalising Rolls-Royce for that reason. We made a judgment that it was the best policy to pursue in the country's interest.
I will end by one more question to my right hon. Friend. Now we have the


company, how do we intend to capitalise it once we have been able to sort out the receiver's problems, the question of assets, sub-contractors and so on?

Mr. Leslie Huckfield: I return to the point made by my hon. Friend the Member for Heywood and Royton (Mr. Barnett), that many firms must be under the impression that Rolls-Royce' had already been guaranteed the £42 million which was assured in the Minister's statement last November. When he said that, he was getting very near the mark. From inquiries which I have made round my constituency, it is my impression that many of the Coventry sub-contractors of Rolls-Royce were genuinely under this impression.
I should like to quote part of a letter which I have received from a firm in my constituency, which clarifies this point:
This company, during November, when the Government promised £42,000,000 was led to believe that Rolls-Royce had official and intense Government backing and on such a belief was quite prepared to carry on with sub-contract work and in fact, in good faith, took on substantial additional work, I might add, to the detriment of other customers. I would therefore ask you to make sure that all trading since that date be completely honoured being insured by the Government.
The letter ends:
Hundreds of jobs and thousands of pounds are in jeopardy and unless something positive is actioned quickly the consequences could be catastrophic.
That is just one letter, but it exemplifies and typifies the sentiments being expressed by sub-contracting firms in my constituency and the Coventry region.
These are not firms which are exclusively concerned with work on the RB211. They are general Rolls-Royce sub-contractors. The impression has been given today that only firms concerned with the RB211 are affected. In fact, a great many other projects involve sub-contractors. When one looks at the Coventry complex of small firms on sub-contract work from Rolls-Royce and realises that many have a very high percentage of their total annual output connected with Rolls-Royce, one appreciates their very strong feelings. When my secretary and I telephoned some of them in the past week, it was difficult to get them to speak for the first five minutes of anything but their anger. That has been the reaction of many firms in my constituency.

Mr. Dalyell: That is absolutely true.

Mr. Huckfield: Another point which has not been made so far is that when the deputation of Coventry Parkside shop stewards visited this House a few days ago we were told that an internal communications memorandum issued by middle management in Coventry Parkside stated that Rolls-Royce had already been guaranteed the £42 million. Even the shop stewards and middle management of Rolls-Royce in Coventry Parkside had worked on the assumption that the £42 million had already been handed over, guaranteed, or at least credited to Rolls-Royce.
Having heard about the letter received by my hon. Friend the Member for Heywood and Royton and about his attempts to get the Minister to make the position clear in this House, I can only add my endorsement that the right hon. Gentleman should give far more information to the House when making statements of this nature.
Many of us have people who work in Rolls-Royce factories among our constituents who are all waiting to be paid—quite apart from the creditors. Those who are paid by means of weekly wage packets are all right: they have their cash. But those who have been prudent and chosen to take their wages in the form of transfers to their banks may find that their cheques are not accepted. There must be hundreds of examples up and down the country of creditors and workers who are in exactly this kind of position. I believe strongly that the Government have a moral obligation to give some kind of guarantee to the firms concerned that they will get back some of their money. I am not an accountant, but I do not think that any hon. Member on this side who represents any profession has been satisfied by the attempted explanations that we have had from the benches opposite during the day. Despite the fact that we have had the Minister, the Parliamentary Secretary, the Solicitor-General and even the Lord President having a go, many of the vital matters about which firms will want information in order to pay their workers tomorrow still have not been explained by the party opposite.

Mr. Barnett: if the Ministers are not able to put at rest the minds of the workers whom my hon. Friend represents,


I might be able to. I am sure that the receiver will provide the cash. This would be a pre-preferential debt, and if workers are not being paid, they should be. Their cheques should be honoured. I am sure that the money will be available and that the workers will have no difficulty.

Mr. Huckfield: I am grateful for that intervention. I would normally go to my hon. Friend for accounting advice. However, in this case an hon. Member should have been able to find out from the Front Bench opposite.
If the local creditors of Rolls-Royce were in some doubt about the £42 million, I wonder about the position of Lockheed. It is interesting to read the statement on behalf of his company made by Mr. Haughton, the Chairman of Lockheed, in which he said:
 … we were completely surprised and appalled at the precipitant decision made by the Rolls-Royce board of directors and the sudden withdrawal of the British Government's financial support for this key industrial firm. The Government's stand today represents a distinct change from its announcement, made last November, when it agreed to advance the Rolls company £42 million.
The statement was printed in full in Flight International this week.
12.15 a.m.
We have heard various allegations in the past week about assurances given to the Lockheed Corporation by Ministers on continuity of support for the TriStar and the RB211 project by the Government. We ought to have a far better explanation of exactly what kind of assurances of continuity of support for the RB211 have been given to Lockheed since last November.
I hope for some clarification on that point, because The Times last Saturday said that the Government told Lockheed in advance that it need not look to the penalty clauses for compensation. I do not know whether the Financial Secretary to the Treasury, the Minister now on the Front Bench, has any further evidence to adduce on that tonight, but when even The Times comes to the conclusion that the Government's solution is being sought in order to welsh on the contract that Rolls-Royce has with Lockheed, the Committee is owed an explanation from the Government.

Mr. Ernie Money: Will the hon. Gentleman deal with the rumour reported in the Press this evening that three American airlines—T.W.A., Eastern and Delta—have offered to allow Lockheed to increase the price of each TriStar by £250,000, and that negotiations on that subject are at this moment going on?

Mr. Huckfield: I am grateful to the hon. Gentleman. He knows that the reason for that is that T.W.A., Delta and Eastern are already committed to extend 100 million dollars of credit to Lockheed. Since T.W.A., for instance, has already pledged about £57 million, it was only in the airlines' interests to allow the price of the aircraft to go up. I am surprised to realise that the hon. Gentleman did not see what a natural follow-on the statement to which he referred is, assuming that a pledge had already been made to give additional credit to the Lockheed Corporation.
Apart from the way in which all this has been done, the most important matter which has not yet been mentioned is that these events have occurred just at the stage when Lockheed was growing very confident about performance, about options and about the operational economics of the TriStar. One has only to read the report in Flight International this week to see that. Just before the RB211 announcement was made, a reporter of Flight International reported from Palmdale and the Lockheed plants in California:
The genuine optimism in this respect is still complemented by a belief that not only will the TriStar survive the financial troubles of the Corporation, which revolve around the C5A, but that in the long term it will be a profit-maker".
That is the kind of optimism which existed in the Lockheed Corporation just before the Minister's statement to the House.
One can only assume that Lockheed had at last settled its contract difficulties with the Department of Defence over the C5A, the Cheyenne helicopter and a few other things, having got the credit facilities from the airlines to which I referred in answer to the hon. Member for Ipswich (Mr. Money), and having got most of its basic difficulties sorted out, it was starting to feel very confident in the options and orders for the TriStar. But now the Rolls-Royce affair has suddenly been flung in the face of the corporation.


I could make a lot of other points of great importance. With the RB211 Rolls-Royce has a stake in the North American market. To many of us who follow the aviation world it has been apparent for a long time that Rolls-Royce could not succeed without some prolonged stake in the North American market. We know the company was not successful in getting the engine order for the Boeing 727 or 747. We know that it was only after a great amount of difficulty that Boeing was persuaded to offer the Rolls-Royce Conway as an option for the 707. It was, therefore, a great triumph and a great joy for the British aero-engine industry that Rolls-Royce managed to get the RB211 put into the Lockheed TriStar, because that meant that Rolls-Royce at long last would have an attachment with an American airframe manufacturer, not just for this generation of trijets and twinjets but possibly for the next generation.
As hon. Gentlemen on both sides have pointed out, this was for Rolls-Royce a real breakthrough in the making. I know it had difficulties with the Hy-fil and titanium blades, and I know there were some difficulties with the trishaft principle, but I am quite convinced that Rolls-Royce had opportunities not only to become attached to a whole new family of engines and airplanes but also at last to achieve a connection with an American airframe manufacturer which had so far eluded it. All this has been put back into the melting pot by the present Government, and put back into the melting pot at the very time when Lockheed had started to feel confident about TriStar.
I could make a big point, I suppose, about the Minister's lack of explanation about why the development costs of RB211 escalated to £60 million. He has still not explained it to the Committee or to the House. He said in his statement last November that labour costs amounted to a mere 15 per cent. of the escalation. Well, if labour costs have gone up a mere 15 per cent. of the escalation, what is the real cause of the escalation in costs? Is it the fact that Rolls-Royce was carrying on dual research with Hy-fil blades and titanium blades? Was it the fact that the engine had to be substantially redesigned because the titanium blades were heavier? Was it because performance could not go beyond 40,000 lb. thrust? What is

the real explanation of an escalation of £60 million in the range of costs? So far we have not had any real attempt at an explanation.
Obviously, as hon. Members on this side have hinted several times this evening, one of the best things which the Central Capability Unit we are assured has been installed—at No. 10, or somewhere—could do would be to inaugurate a full social benefit cost analysis. My hon. Friend the Member for Heywood and Royton has already hinted at some of the social costs involved, not just a Roskill user cost at Foulness, or how much is the beauty of a village church in the country. We are dealing with social costs which will be a charge on the Exchequer, and what the Government ought to be doing is thinking not just of the 6d. off the income tax in the next Budget but of the full range of costs and benefits of continuing or not continuing the sub-contracting for the RB211.
It is not just the compensation to Lockheed. It goes far beyond that. It goes as far as paying out unemployment benefit; it goes as far as contributions to the Redundancy Fund; it goes as far as the loss of corporation tax from Rolls-Royce and from the sub-contractors. These are things the Central Capability Unit might be investigating, and the possible contraction of the social benefit basis. We have not had the full figures. and judging by some of the meagre and paltry excuses we have had during the day, I do not think that we shall get them, but since many of these claims will fall on the Treasury, there is a crying need to bring far more of these costs into the equation.
I believe that we have to work out a formula whereby under the Bill we shall have some public accountability in respect of Rolls-Royce. I have never been satisfied about this. In the past, when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) was Minister of Technology—and in his various other capacities—every time we put down Parliamentary Questions about Rolls-Royce we were told, "This is a matter not for the Government but for the commercial judgment of the company." I can only say that it seems to me that the formula being offered under the Bill for nationalisation means that


we shall have even less opportunity to put down Questions. But I am concerned not only that the nationalisation of Rolls-Royce should be extended much further than is proposed but that provision should be made for public accountability and parliamentary questioning.
What is at stake is the fact that if we miss out on this generation of turbojets—and it is a very important generation indeed—we shall not get back at all into the next generation, because we cannot get into the generation of 90,000 lbs. or 100,000 lbs. thrust unless we have been through this generation, and it appears that the Minister is trying very hard to cancel this generation. If we do not go through this generation I cannot see how we can break through into the next. That is the immediate stake of the industry.
What, in the long term, is even more at stake is whether anyone in the world will ever trust us again. Many of us have found one of the pleasantest things on going abroad has been what has been said about our parliamentary system, our government and the integrity of British government. People abroad have said: "Well, I suppose you British always stick to your word." They will not say that in future: they will just say "Rolls-Royce." That is the kind of situation many of us can envisage.
That being so, will the Minister, apart from trying to give some kind of assurance on the points I have put to the Committee, say that he will seriously consider continuing with the RB211 project? There are airlines which ordered TriStar specifically because the RB211 was to be the engine. Eastern Airlines ordered 60 and TWA ordered 44 specifically because the engine was to be the RB211. They are very disappointed and sore airlines at the moment. What is at stake is not just the airlines or the British aero industry, but the whole integrity, reputation and standing of the country.

Mr. T. L. Iremonger: The hon. Member for Nuneaton (Mr. Leslie Huckfield) has really made a Second Reading speech, which is, of course, entirely right and proper for the House, but I want to ask the Minister just one question which I hope he will later answer. I was very worried to

hear my hon. Friend the Member for Eastleigh (Mr. David Price), in winding up the Second Reading debate, say what he did about the possibility of foreign offers being made for the company, and the determination to overbid any such offers. The Committee has been left in some anguished doubt as to what exactly this implies.
I should be grateful if my right hon. Friend would comment on this point, because this Clause, which is the heart and the only important part of the Bill, merely says, in effect, that the Crown may buy Rolls-Royce—it does not say that it shall—and it is open to any bidder from any foreign interest to step in and make a higher offer and any official receiver will have a duty to accept the offer because he has to protect the interests of the company's creditors.
12.30 a.m.
Since the object of the Bill is for the Crown to acquire the company in the national interest, I should like my right hon. Friend to say at what stage steps will be taken to see that the company is so acquired by the Crown and by nobody else. If a balance has to be struck between the duty of the Official Receiver to the company's shareholders and the need to prevent the company going to a foreign firm it will be a bad thing if that balance is tilted so that it does go to a foreign firm.
At what stage, if any, and by what means, does my right hon. Friend intend to step in and see both that a fair price is paid for the assets that are acquired and that they are acquired by the Crown and nobody else.

Mr. Elystan Morgan (Cardigan): A number of hon. Members on both sides of the Committee have referred with great indelicacy to "welshing". That term is obviously offensive to one of the nations of the United Kingdom, and it is particularly ironic when it is used in connection with probably the most un-Tory and anti-Tory nation on the face of the earth——

Mr. Michael McNair-Wilson: Would the hon. Member not also regard it as a gratuitous insult to talk disparagingly about a "banana republic"? Just because a country grows bananas as its crop, is it more dishonest than one that does not?

Mr. Morgan: I was considering this matter very chauvenistically, thinking only of the good name of the countries of the United Kingdom. Many hon. Members would regard it as grossly offensive to people who are English if the term le malaise Anglais were used to describe homosexuality. I submit that the same courtesy should be extended to the Welsh nation in relation to a situation which can be described by the use of many other terms of abuse in the English language.
My first question relates to the statement made last week by the Minister of Aviation Supply. He described the arrangement made last November—less than three months ago—between the Government and the company in such terms as to suggest that there was nothing in the situation that would put Ministers of the Crown upon inquiry in relation to the general financial state of Rolls-Royce. It is true that when the loan of £42 million was made the transfer of the money was made conditional upon a satisfactory accountant's report, but the agreement on behalf of both the Government with regard to the £42 million loan and the banks in respect of their £18 million share was made upon the supposition that there was little wrong with the general financial state of Rolls-Royce.
Were preliminary inquiries even of the most cursory kind made at the time, or was it assumed that the general financial stability of Rolls-Royce was beyond all doubt? Is it true, as my hon. Friend the Member for Heywood and Royton (Mr. Barnett) has said, that the consideration of the accountant's survey came rather as an afterthought? Was any general appreciation of the situation made before the agreement in principle to make the £42 million loan was arrived at?
My second question concerns Section 332 of the Companies Act, 1948. As I understand it—rather heated passions were exhibited in the House at the time—the statement of the Solicitor-General was to the effect that it would have been highly dangerous for the Government, if they had seen fit, to back Rolls-Royce once they knew the true financial position. It is even suggested, I understand, that the Government would come very near to committing the offence, if not

actually committing it, of compounding an offence under Section 332.
Does the Minister really say that that is the position? Does he agree that the operative phrase in Section 332 is "intent to defraud"? That means two things. It means a deliberate commitment to defraud, or recklessness on the part of directors and those who have the management of the company to such a degree that they care not whether the remaining assets of the company be frittered away in a situation in which it is impossible for the company ever to recover. If the Government accept the definition—the two heads of fraud in that connection—how can it possibly be that when a Government with almost unlimited resources hitches its wagon to a company there can be any question of either a deliberate attempt to defraud or complete financial recklessness?
The Minister owes it to the House to say whether that is his definition and whether he says that the Government were inhibited in the courses of action they could have taken because they feared that, actually or by analogy, they would have been enmeshed in the offence described in Section 332.
My third point relates to the statement made by the Parliamentary Secretary in winding up the debate on Second Reading. He seemed to be saying that in order to ensure that control in the part of Rolls-Royce in which they are interested would be kept in Britain at all costs, the Government would trump any genuine bid made by a foreign concern. I appreciate that there are two matters there. One is the legal obligation of the receiver. He is in a trust capacity. He must sell in the best market possible consistent with a fairly early sale and an expeditious division of the assets. But is the Minister saying that an unreserved guarantee has been given by the Government that control in the remainder of Rolls-Royce will not be allowed to pass beyond these shores?

Mr. David Price: The Government have said that the control of the new company will be in wholly British hands, certainly initially. My right hon. Friend talked about possible S.N.E.C.M.A. participation, but initially, when the company is formed to take over the assets, it will be British. The point concerns the


hypothetical possibility of the bidding going up. Clearly there would come a point, if bids went on up, when the market was being rigged, in which case one would call the bluff. May I say in response to the hon. Member for Stockton-on-Tees (Mr. William Rodgers) that the Receiver is not the creature of the Government. He has his duty to the debenture holders, and, therefore, if he gets a better bid it can affect the price at which the Government make their bid to the receiver.

Mr. Dalyell: This might be a convenient moment to ask what the rôle is in the next few weeks of Lazard Brothers?

Mr. Morgan: I am deeply grateful to the Parliamentary Secretary for his intervention. These questions arise from what the hon. Gentleman has said now. Is he saying that in the initial presentational exercise control will be maintained in British hands, but that no guarantee is given with regard to any further statement? We are not talking about bluffing and false bids. Is the hon. Gentleman saying that if there is keen international competition to acquire the assets the Government will see to it that they top all the bids? If he is, it must be his clear duty to say how that could possibly be consistent with the speech by the Prime Minister last Sunday.
The right hon. Gentleman then said that it was a great tragedy that Rolls-Royce should have collapsed, that it was a great national disaster and disgrace and a great tragedy for the persons concerned, but that the paramount consideration was the interest of British taxpayers. How can one on the one hand say that one will commit oneself to an open-ended commitment to trump all international bids, however high, provided that they are genuine, and on the other hand say that one's taxpayers come first? Are we to keep control in Rolls-Royce at all costs, as if it were a priceless, sacred talisman, and damn the taxpayers, or must the taxpayers' interests be paramount? It is a simple question, and it admits of a straight, simple, clear answer.
My last point concerns the statement by the Solicitor-General in the context of such part of the assets of Rolls-Royce

as are located in the United States. I well understand that he would not be expected to go into the detail of United States law in relation to each and every situation that might develop in this connection. But will the Minister who replies tell us whether any of those assets consist of movables as defined in private international law, and, if so, what percentage of them? I believe that it is accepted the world over that the law relating to movables is always that of the country in which they are situated. Therefore, it does not at this moment matter to us exactly what the conditions would be but we want the Minister to tell us categorically that the operative law with regard to those movables will be that of the United States, either Federal or State law.
I do not put those questions in any spirit of malice. Each of them goes deeply to the root of the problem. They are questions deserving an answer, and the Committee expects that answer to be given.

Mr. Bishop: I come to the Dispatch Box rather late—or early—in the day, but I do so without apology because, although we have been kept from our beds, thousands and thousands of people up and down the country will also be awake with anxiety tonight. Many people in the Public Gallery have shown their concern and interest, and thousands of people who have lobbied hon. Members today have demonstrated their concern and anxiety. When we go to bed we may suspect that many will be worrying about their losses—financial losses, the loss of jobs and prospects, and other losses. There must be many shopkeepers and others throughout the country who will fear the results of this national disaster, which is very much like a tidal wave that has swept across the shores from the United Kingdom to the United States.

Mr. Iremonger: On a point of order, Mr. Johnson. I am sorry to interrupt the hon. Gentleman, and I hope that he will not take it amiss, but is it not strictly out of order in the Chamber or any part of the House, in full session or Committee, to refer to the Public Gallery? If the hon. Gentleman wants to spy strangers, let him do so.

The Temporary Chairman (Mr. Carol Johnson): Order. It is strictly out of order, but I do not think that anyone could object to the manner in which the hon. Gentleman used his illustration.

12.45 a.m.

Mr. Bishop: I think that we can leave it to you to say when I am out of order, Mr. Johnson.
The point remains, now that the madding and perhaps maddening crowd has left the Chamber, that we have had a very orderly Committee stage. We have heard extremely good speeches on both sides from hon. Members with experience of accountancy and the law. But I suspect that the views of the engineers and designers have not been heard as they should have been, and that brings me to the core of the Clause. I suspect that there has been a great deal of anxiety and concern about the rather unfortunate remarks made by the Minister on Monday, when he gave some indication that he was not quite so keen on the technical aspects of the RB211 as he might have been, although I recognise that since then he has tried to retrieve the situation.
This is one of the most important points if we are to talk about this Bill as a message of hope to thousands, not only in this country but abroad, and as an indication of the desire of hon. Members on both sides to do all they can to retrieve the position. I recognise also that hon. Members opposite have had to say and accept unpleasant things tonight in going as far as they have in this degree of public ownership. We feel that the Bill does not go far enough, but at least we have all been united in a common desire to do everything possible to retrieve the situation.
But I suggest that the core of Clause 1 is whether or not we want the RB211 engine. That is why I made my comments a few moments ago to the Minister. The criticisms levelled at the RB211 engine by the Minister, on the research and development uncertainties and escalating costs and the effects of delays before production, apply with equal force to every aircraft and every aeroengine manufactured in Britain and abroad. This will continue to be the situation for years to come. The RB211 escalation problem is by no means a rare situation. We have had it before,

and we must live with it for a long time to come.
We need the vast resources which only the community can give in order to deal with these eventualities. There are two main points to be borne in mind on the subject of the contract. There is no proof that what happened to the RB211 on its research and development and costs would not have happened to any other manufacturer who might have secured the order, even at a higher price. That part of the problem is not only related to the commercial difficulties of Rolls-Royce but applies to the shaky financial situation facing Lockheed. Lockheed must have been anticipating to some extent what eventually happened. Those of us who know that the aircraft industry and the extent of the escalation which is inevitable in it must have suspected when the fixed price contract was signed that this situation was a real possibility. There has been justifiable comment about the effect on Concorde itself.
It is all very well for people with hindsight to claim that the last Government should not have agreed to the contract in the form they did. But we have heard often enough, probably too often, from the present Government about the need to trust private enterprise to know its own business best. One wonders about the possibility of having an army of civil servants, many of them quite unacquainted with the industry, with the job of going round to private firms to check whether their estimates and calculations and forecasts are reliable before we agree to any contract. In this unique situation, where there is specialisation in the industry, we have to trust the people concerned to know their job. In the light of their present policy, would the Government have backed a contract which would have allowed for the escalation of costs?
I referred earlier in the day to the fact that 64 hon. Members opposite agreed to a Motion which placed full confidence in the prospects and applauded the efforts of Rolls-Royce teams technically, and also applauded the work of the financial institutions which made the deal possible. It gave no credit to the Government of the time, and I had to initiate a Motion to do that. But it seems rather unfair to say that the Government of that time should have no credit for the deal, and then suggest that my right hon. Friend the


Member for Bristol, South-East (Mr. Benn) should now take a full share of the blame. At least he has asked for a Select Committee of Inquiry into the matter, and I hope that something is done about that.
The point is that whenever cancellations take place hon. Members rightly point out that what is wrong is suddenly to stop not just the project but the prospects of future developments with so much promise. My hon. Friend the Member for Nuneaton (Mr. Leslie Huckfield) has made this abundantly clear. This is the core of the situation. First and foremost in the Bill we have to show confidence in the RB211 itself. If we do not have that, all the debate today and all the anxieties of the House of Commons and millions of people in the country will have been useless. Whether or not the Government are committing themselves to this engine, which technically and in many other ways has much to commend it—we know that many air forces and airlines are relying on it and its future stages of development, which we now have the prospect of seeing—that would make the exercise worth while.
The editorial in The Times on Wednesday mentioned some of the technical aspects which were well worth reading about. There are many aspects to the engine itself which are a major breakthrough, with low noise, a significant step forward in design, flexibility, better performance and so on. All of these are of tremendous importance to the development of this engine and those which are to follow.
I believe that renegotiating must be the basis of the Government's policy in future. In this we may be encouraged by the Financial Times, which, reporting from New York on 9th February, quotes Mr. Haughton, Chairman of the Lockheed Corporation, as saying that it was now up to the British Government to pull the RB211 contract out of the fire. He said that it was an assurance that was absolutely imperative to both Lockheed and the airlines which wished to buy the L 10–11 airbus. He went on to say that there was no reason at all why we should not get together on this matter, and he was of the opinion that if we had the intention of doing something about it, this could be achieved. This is a most important point.
We say that there should be not partial but full nationalisation of Rolls-Royce. One wonders whether the Government dealt frankly with the Lockheed contract when they knew the position. Why did they not offer to put in more money so as to complete the contract? There has been defaulting with Lockheed, but I believe that there is still time to renegotiate and take over Rolls-Royce fully in order to renegotiate the contract itself.
It is also important that we act as quickly as possible in order to preserve confidence not only in the firm, but in the sub-contractors and to keep the design teams together. If we lose the design engineers and technicians and those whose skills have been bound up in this great enterprise for many years, we shall lose the very essence of Rolls-Royce itself. At the weekend and in the days to come there will be many people whose jobs are bound up with the firm who will be looking for alternative forms of work and employment elsewhere. Once design teams are broken up, it takes a year or two or even longer for those people to be brought together again to work as a useful unit.
There has been talk of the interests of the taxpayers. Many of us who heard the Chancellor talking of those interests heard the word "taxpayers" more often than we would have liked. We would have liked the right hon. Gentleman to have mentioned the word "workers" more often in that context. When we recognise the contribution of the taxpayer we should also recognise the social costs which have to be taken into account, as my hon. Friend the Member for Nuneaton mentioned. There are such matters as redundancy payment fund contributions which have to be made, unemployment benefits, social security and the effect upon the business community, the shopkeepers and many others.
At the end of the debate we are perhaps thinking of the great technical strides which have been made. In the recent Apollo moon mission we read that the module landed at a point marked only 22 metres from the target. If we are able to do that, it seems inconceivable that with the vast resources of these great firms we cannot ensure that we land the RB211 engine into the airframe where it is desperately needed. I am sure that this can be done. It must be done.


As we end our deliberations and place our hope in a piece of green paper we call the Bill, we ought to send out a message of hope, not false hope, but a message saying that at the end of a rumbustious day of sincere debate between the parties we are united in our endeavour to make sure that the people who have made their contributions to this venture are able to carry on. There is no alternative, because to replace the engine means at least three years' work and a complete redesign for the aircraft. We rely upon the Government not only to be sincere in their intentions to keep this engine but also to be willing to keep us informed of what is going on.

Mr. Corfield: We have had a long debate, and I hope the Committee will forgive me if I sometimes get my pile of notes muddled.
The hon. Member for Newark (Mr. Bishop) and others have asked me to say that we are sincere about the RB211. I have already done so, and I repeat this willingly. The hon. Gentleman put his criticism of my remarks on Monday a good deal more moderately than some of his colleagues. It is clear from reading what I said in its context that I was referring to time. I used the word "time", not "inferior".
It is right that we should look at the result of delay. I agree that delay and escalation are not, alas, unique to a particular engine or firm. Where there is delay it is sensible to look at the effect on the market, and I did my best to make an assessment. I did that in large part because I do not believe that it is right, as several hon. Gentlemen have suggested, that this is the beginning and end of everything. The technology is enormously important. I do not believe that we can say that there is absolutely no future for the British aero-engine industry. One of the first things I did was to put in hand studies so that if we cannot re-negotiate, we do not lose the technology and can get some value from this.
1.0 a.m.
Escalation has been touched on by a number of hon. Gentlemen. The Committee must try to appreciate that as at, I think, 20th July—it may have been a little later—it was thought that the launching cost was £75 million. Very

soon afterwards—I cannot remember the exact date, so I hope the Committee will bear with me—it was £135 million. That was the figure on which we were working in November. By January it was £170.
Hon. Gentlemen asked for a White Paper with the figures. I really had no faith in the figures. I am sure that the hon. Member for Heywood and Royton (Mr. Barnett) will agree that with accounts in this state it is not easy to sort them out quickly. It is certainly beyond me, and I dare say that it would be beyond the hon. Gentleman, to sort them out in a short time. However, I am sure that, given time, he could do it.
This has been one feature which has made the decision so difficult and made it almost impossible to produce the kind of information to which the Committee may feel it is entitled and which I should like to have given.
Returning to the Section 332 problem, I am sure that the hon. Member for Cardigan (Mr. Elystan Morgan), as an ex-Minister, the right hon. Member for Bristol, South-East (Mr. Benn) and the hon. Member for Stockton-on-Tees (Mr. William Rodgers) realise that Governments seek their advice from the Law Officers of the Crown, not from Ministers of Aviation or anything else. Even if they happen to be lawyers, they are not good company lawyers. So what I say is not my view but the Government's view. I think that is the right way to put it.
I understand that the interpretation is precisely, not surprisingly, the view of my hon. and learned Friend the Solicitor-General, who intervened in the debate earlier. I suspect—again, I do not want to express a legal opinion—that the reasoning against the argument used by the hon. Member for Cardigan was accurately put by my hon. Friend the Member for Belfast, East (Mr. McMaster). No doubt this is a matter which the hon. Member for Cardigan and others who are interested can look up in the Law Reports. I can only say that this was the interpretation, and it was a real inhibition on the time scale. It was abundantly clear that not only was it our advice but it was equally the advice of counsel consulted by the Rolls-Royce board. They therefore felt themselves


to be in a very precarious position if they extended the time.

Mr. Elystan Morgan: I know that the right hon. Gentleman appreciates that he is on a very important point. If the Government felt that they were inhibited taking a course which they might otherwise have taken on account of the advice given by the Solicitor-General turning on the wording of section 332, surely the issues with which we are concerned are so important that Parliament could have repealed, amended or replaced Section 332 by something more appropriate.

Mr. Corfield: I must say that it would seem a fairly unconstitutional operation to repeal the law to get a Minister off the hook. But we could not have done it while the law was there, and I think that we might have taken longer than would have been comfortable for the gentlemen concerned.
However that may be, that was the situation. I assure right hon. and hon. Gentlemen that I and many of my colleagues sat up long into the night arguing how we could make more time to see whether we could negotiate on a less rushed basis with Lockheed.
My hon. Friends the Members for Oldbury and Halesowen (Mr. Stokes), and Bradford, West (Mr. Wilkinson) both made gallant attempts to try to draw some lessons from this catastrophe. I shall not repeat what they said. I can only say that this again is something that we have already put in hand to try to see where things have gone wrong, but can be improved, and, in particular, we have to look at the whole concept of launching aid; and this is not a criticism of the right hon. Gentleman.
We had got to the stage in this contract that had we gone on, except for the first tranche, it would from then on have been 100 per cent. underwriting of the company, and, as the right hon. Gentleman has said on many occasions, the whole basis of launching aid is that the element of risk gives one a certain guarantee of incentive and efficiency which enables Ministers to feel that they can reasonably safely not set up a parallel organisation, which would be expensive and probably inefficient, to monitor everything the industrial company does. But once one gets to the stage of 100

per cent., from there on this is not launching aid as we originally conceived it, and I am sure that the right hon. Gentleman would agree with that. That is one of the difficulties. Whether we have learned the right answer is another matter.
One of my hon. Friends referred to the question of top management and the necessity of men, and how much more important they are than the system. That is something with which we all fully agree, and I have little doubt that my hon. Friend is right that at certain middle management levels there has been a good deal of over-staffing.
The hon. Member for West Lothian (Mr. Dalyell) raised a number of points, one of which was in connection with Shorts. This company is directly under the Government's control. There is no doubt that it will be seriously hit if the RB211 does not go on, but it is a matter which I am considering under my hat as being responsible for that company as well as in relation to the matter that we are debating tonight.
As regards the engine, I do not think that I can say any more. The technology is of tremendous value. I am sure that we ought to do our best to renegotiate, but I do not think we ought to think that the end of the world has come for the future of the aviation industry if we cannot.
I am surprised at the suggestion made by several right hon. and hon. Gentlemen that we shall never again be trusted in America. When one looks at America, one realises how much more ruthless they are in these matters of commercial discipline. I cannot pretend that I find it difficult to recall any occasion but I find it difficult to recall any occasion on which the American Government have bailed out a private company, whatever the effects on its creditors, and I find it difficult to believe that they can honestly turn to us and use the sort of argument that has been suggested.
Another matter which has been raised by a number of hon. Members is this difficult question of valuation. As I explained, I am not a professional valuer, and again the time-scale is such that to have identified all the bits of Rolls-Royce, even if we were accepting the Opposition's Amendment to nationalise the whole lot, and put a value on them in a


week would have been asking the impossible. I am sure that on reflection hon. Gentlemen opposite will realise that that is so. I realise how immensely important this is to the Government and to the House as representing the taxpayers, and to the receiver as representing the debenture holders in the first place, and creditors in the next, but I hope the Committee will realise that it would have been an impossible exercise to have valued the undertaking by now, or even to have given an approximate price as to what would be reasonable.

Mr. Barnett: I entirely accept the Minister's point. No one could have expected him to do so inside this time. But would he at least make it clear that he is intending to buy the enterprise not "on the cheap", on break-up values, but at going concern values? This would make a considerable difference, as I am sure he realises.

Mr. Corfield: The usual expression is, on a "willing seller, willing buyer" basis. But I can visualise cases in which the going concern value might be less than the site value, particularly in places near London, where the value of the sites is often enormously high, particularly if they are sites with plant which is relatively obsolescent. It could work out that way; but I have no means of doing that complete individual identification.
The hon. Member for Dudley (Dr. Gilbert) asked me many questions which, frankly, I would find it much easier to answer if I could read them in HANSARD in the morning. He asked whether we had yet made any survey of the subcontractors affected. This was something which I put in hand immediately, but while it was still in doubt what the future of Rolls-Royce would be, one could not run to the creditors and ask, "How much are you owed by Rolls-Royce, because it may be in difficulties?" In any case, we should only have had two days in which to do it.
Now, with the intervention of the receiver, the next stage has to come from him, because he is in possession of the information. I certainly do not think that I would be able to give any indication of the proportion of the debts due in respect of the Lockheed contract compared with the total debts due, which

was one of the hon. Member's questions. Anyway, I will certainly look at them in the morning and ensure that we do our best to answer them or to tell the hon. Gentleman why we cannot.

Dr. Gilbert: Would it not be possible—I accept that it would be out of the question at the moment to put a value on this situation: no one is suggesting that—for the Government to make a range of estimates from the worst to the best that they would come out of this situation, allowing for penalty clauses and costs and so on? If they want to, they could make some sort of indication available to the creditors that within that range of total costs they could pitch the price so that the creditors could expect a certain range of relief from these problems.

Mr. Corfield: The biggest difficulty here is the question of the unquantifiable claims of Lockheed, if they eventuate. If we can negotiate, of course the first base of those negotiations would be to eliminate those claims. The receiver would be in a position, when he has had time to collect the information, to begin to see where people stand. But it is an almost insuperable problem to give an accurate estimate one way or the other. It would be for the receiver, if the worst came to the worst, to settle out of court. But I do not believe that anyone will go to court on an immensely complicated matter of this sort, with the New York law, if he can possibly help it. But, like my hon. and learned Friend, I do not profess to be a New York lawyer.

Mr. John Mendelson: The Minister must be fair, as we are trying to be fair to him, and relate this to the debate which has taken place during the past day. The point of my hon. Friends was rather different. Surely the Law Officers of the Crown had a duty to advise the Cabinet in the weeks preceding the decision, and then a duty to inform themselves of the legal position of the United States.

Mr. Corfield: It was not a question of weeks, and the contract between Lockheed and Rolls-Royce was a very bulky document. But it was the property of Rolls-Royce, and I am not even certain that it was in our possession at the time. Certainly it was only a question of two


or three days. To learn the New York law and then study the document I think even the hon. Gentleman would find a fairly formidable task.

1.15 a.m.

Mr. Kilfedder: When the contract was entered into between Rolls-Royce and Lockheed, did the Law Officers at that time examine the legal position and inform the Minister of Technology of the day?

Mr. Corfield: I hope that I am not putting words into the mouth of the right hon. Member for Bristol, South-East, but, knowing how these things work, I should doubt it very much. I should think that undoubtedly what happened was that the contract went to the contracts department in the right hon. Gentleman's Ministry, which is now mine, for no other reason than to negotiate the contract for launching aid and the levies payable, but I greatly doubt if other lawyers came into it. Perhaps the right hon. Gentleman can remember.
I looked into the pensions position earlier today. As far as I am aware, the situation is that there should be no difficulty about the transfer of pensions in respect of employees who are taken on either by the newly-formed Government company or by any other purchaser of a complete division. I qualify that by saying that I have not had time to obtain expert advice on all the pension schemes, because there are a very large number of them.
I am glad to have the opportunity to deal with the point raised by the hon. Member for Heywood and Royton about what I said in answer to his question. There is no doubt that I made a mistake, and I wrote to him. Although a reading of the answer to that question by itself would be misleading, it happens that on the same day I gave another answer of precisely the same nature in which I said quite clearly:
I would do what anybody else would do: consider the matter as it arises and not jump fences before reaching them."—[OFFICIAL REPORT, 9th December, 1970; Vol. 808, c. 388.]
It was for that reason that I did not think that the hon. Gentleman could be asking the same question that I misunderstood him. The hon. Gentleman

will agree that in my statement it was made clear that it was a condition.
In replying to the debate on Rolls-Royce launching aid I said this in November:
One or two hon. Members asked what was meant by the £42 million being subject to the appointment of an outside accountant. It was solely because the sums varied so rapidly and so often.
I never thought that they were going to repeat themselves.
I thought it right, because of the magnitude of the sums, to make sure exactly what the shortfall was, because the sums required to meet the cash flow depend upon the degree of shortfall."[OFFICIAL REPORT, 23rd November. 1970; Vol. 807, c. 157.]
No one who had studied these matters could be in any doubt. Anyone who had read what I said in reply to the question in the very same column of HANSARD, I think, could not be misled. However, I admit that I was wrong, and that is why I wrote to the hon. Gentleman.
When I looked at it, I thought, "Suppose the accountant comes out with a lower figure; we do not stand in with the whole £42 million". I was worried about that aspect; because, as I said the other day, never in my wildest dreams—or nightmares—did I think that this would happen.

Mr. Barnett: I am sure that the Minister will agree—indeed, he has agreed—that his last statement on the record was in reply to me and was to the effect that the £42 million would be provided whatever the accountants' report was. That was the last statement before the Receiver was appointed. That was the last thing that was on the record for everyone to see, whatever had been said earlier. There would have been some suppliers who would have been entitled to take that statement as the right hon. Gentleman's last word, as it was.

Mr. Corfield: Any supplier who was taking an interest in these things would have read the whole statement in the original case and the longer debates and the very large number of questions that have been asked since. I should be very surprised if anybody was misled by that. It must be borne in mind also that the whole basis of launching aid is to attach it to a particular project so that


once the project had been stopped by the Rolls-Royce board, it stopped.
I suppose that to some extent it was purely fortuitous that we had this decision in front of us given by the Rolls-Royce board before the £42 million had become due to be drawn. I am not sure what I would have done had I been called upon to make it available before the accountants had reported. That is hypothetical. But if one had had no indication that there was trouble brewing, one would probably have made payments available. It was because we had this really disastrous picture put before us, and it came at that time, that the money was not there.

Mr. Leslie Huckfield: Would the right hon. Gentleman offer comment on the fact that I have seen in the House an internal communications memorandum submitted from the middle management of Rolls-Royce at Coventry Parkside to the joint shop stewards committee which states, in typewritten and photo-copied sheets, that Rolls-Royce has already been guaranteed the £42 million? If this was the impression of some of the sub-contractors, it was certainly the impression of many of the middle-tier management in Rolls-Royce.

Mr. Corfield: I find it very difficult to find an excuse for that, because I am convinced that the Department, whether under the right hon. Gentleman or myself, would have made that quite clear. It does not matter whether he or I was there, because that would be absolutely standard. After all, they are the people who officially deal with Rolls-Royce management in these matters. It is difficult to believe that that mistake could have arisen.
The hon. Member for Heywood and Royton suggested renegotiating the contract. I merely confirm that there were possibilities in that direction which we have not neglected. Another matter which he raised was the question of the workers' shares. This matter has given me a great deal of concern. I accept that they are peculiar types of share, with advantages in some respects over other shares and in many respects disadvantages. I have been looking into this very carefully to see whether something could be done in the new company, but I do not want to give any firm

undertaking to that effect. This is a matter which I will look at.
My hon. Friend the Member for Walthamstow, East (Mr. Michael McNair-Wilson) asked whether we had allowed the company to go bankrupt because we were not prepared to bail out the RB211, and, if so, why did we not renegotiate the contract. I hope I have answered that. It was the time factor. In so far as there was time—I had about one day to see Mr. Haughton—it was quite clear from questions I put to Mr. Haughton that he was unable to make any offer at all either on increasing the price he would be prepared to pay for the engine—our information was that that had risen by £110,000 per engine more than the contract price—or on giving us any undertaking about claims for the engine being late. I do not blame him for that because it was very short notice, and we all know that Lockheed has had financial troubles, and clearly he had to go back to his bank. There was considerable evidence that Rolls-Royce was right when it advised me that it was unable to renegotiate.

Mr. Michael McNair-Wilson: My point was not why the hon. Gentleman did not renegotiate but that, if we are nationalising, how can we also be talking about renegotiation. It is "either/or" surely.

Mr. Corfield: The hardware, skills and facilities are there. If we can re-negotiate a new contract which enables us to sell the engines to Lockheed at a price much more realistically related to the cost, and if we can go ahead relieved of claims for lateness, then we shall be in an entirely different situation on the RB211 to that in which Rolls-Royce found itself and which led to such great difficulty.

Sir H. Legge-Bourke: Have we not tended to lose sight of who is the end customer? It is not Lockheed but, eventually, the airlines. When we consider the possibility of renegotiating with Lockheed, would it not be wise to ensure that the airlines are brought in, so that we do not get a similar situation played back on us because Lockheed goes bust?

Mr. Corfield: That is a very relevant point. My hon. Friend has reminded me that there were direct contracts with the airlines as well, so that has made it more


difficult to assess what the total claims are likely to be. We are dealing not merely with the claims of Lockheed against Rolls-Royce, but with those of the airlines as well. There again, Mr. Haughton has been having discussions with the airline customers, and, no doubt, he will be able to keep me up to date on the situation there.
I come, then, to the hon. Member for Nuneaton (Mr. Leslie Huckfield). I am afraid that I was out of the Chamber during part of his speech, but I think that his most important point concerned the Lockheed belief that the £42 million would be paid, and he mentioned the assurances alleged to have been given by the Government since November. There again, I find this difficult to accept. Shortly after I took over this Ministry, Mr. Haughton came to see me in my Ministry, and I am as certain as I can be that he was fully aware of the situation. At that time, we were concerned with what I might call the November problem. We made it clear that we were very worried about the Rolls-Royce situation and that we could not offer an open-ended commitment. There must have been a misunderstanding or some misreporting, and I have since talked to Mr. Haughton on the telephone and explained the position.
My hon. Friend the Member for Ilford, North (Mr. Iremonger) was worried about foreign offers or bids for this portion of Rolls-Royce. This is a matter which I took up early in November when Rolls-Royce shares dropped fairly low, and I was worried that they could easily be bought up by overseas organisations. As I understand it, however, any buying by an overseas organisation could be controlled by the Exchange Control Act—certainly if it came to buying any shares. The situation otherwise is that of likelihood or practicality. Again, I took advice, and one has to accept the advice that any firm thinking of taking over a vast complex of this sort or even part of it will require considerable investigation into the accounts, and so on. If there were any fear of a genuine bid, there is no doubt that we could take other action.
The reason why we did not take compulsory powers to ensure that we had the situation in hand was simply one of time. As I have stressed throughout the

affair, we felt that we had to be quick if we were to restore confidence. Unfortunately, the procedure of this House is such that, if we had wanted compulsory powers, a Hybrid Bill would have been necessary, and that would have taken a long time to get. It seemed better to take the power to negotiate, knowing that, if the worst came to the worst, we might have to come back. I am sure the Committee will agree that it is very much better to have it quickly.

Mr. Benn: Can the right hon. Gentleman confirm my recollection that, so long as it was a voluntary acuisition, the Industrial Expansion Act on the Statute Book would have allowed him to acquire Rolls-Royce by agreement, without requiring this Bill?

Mr. Corfield: The right hon. Gentleman is probably right. But we have always taken the view that if this sort of thing had to be done, we ought to come with a special Bill for the special purpose. I think that that is the right way of doing it.
I trust that I have dealt with most of the points which have been raised. It has been a long debate. I hope that we at least understand each other better. I am sure that the Committee agrees that we were right to act quickly, and that we were right to do it as a special Measure. I know that there is a difference of opinion between the two sides on how far we should go, but at least there is a measure of agreement, and the Committee feels that we are right to hold open the options on the RB211 and hopes that we shall be able to re-negotiate the contract.

1.30 a.m.

Mr. Dalyell: Any fair-minded Member will appreciate the spirit in which the Minister has in the last hour or two tried to answer the serious questions which we have put to him. If I say that his reply will not do, it is not that I mean to be impertinent or rude at this time of night.
The right hon. Gentleman began with, as his first substantial point, the observation that the RB211 was not the "beginning and end of everything". It is all very well to say that, but there are serious people who believe that it will have the gravest effect not only on the RB211 but on the Harrier and on Concorde. It is said that the problem of the sales teams who will have to try to sell the Concorde


will be well nigh impossible, and that those who will go out and try to sell the Harrier and the whole Harrier family of aircraft will be in great and real difficulty.
I may be doing the Minister an injustice, but, as I understood him, he got out of that one by saying, in effect, that the American market is far more ruthless, that we did not really understand how ruthless people were in the United States, giving the impression that this would be some sort of seven-day American wonder. That is not our information on how the Americans have reacted.
I shall gladly give way to the Front Bench if they can produce a single instance of a major situation in recent years in the United States which can be called a parallel in any meaningful sense to what the British Government have done. My hon. Friend the Member for Birmingham, All Saints (Mr. Brian Walden) has an extensive knowledge of the United States, and I wonder whether he has any example in mind. Seriously, I cannot think of any parallel example.
It is all very well to say that the Americans are ruthless. It is the climate of opinion which is affected here, the climate of opinion of the international and multinational companies. The important point, as I tried to say earlier, is not whether the hon. Member for West Lothian thinks that this is a "banana republic" act. This is what is being written and put abroad in the United States, and, rightly or wrongly, for better or worse, it is considered an act of infinite perfidy.

Sir H. Legge-Bourke: I am sure that they have plenty of publicity with which to put that sort of stuff across, without our doing it here.

Mr. Dalyell: I should not have thought that anything done here at this time of night would exactly add to the publicity. It is all over the American Press, and it is what the American salesmen are saying. If I repeat it, I do so simply because I want to see the decision changed. These things have to be taken into account. One does not say such things just for the fun of it. One says them because one wants the policy of the hon. Gentleman's party to alter.
The hon. Gentleman the Member for the Isle of Ely (Sir H. Legge-Bourke) is an honourable man. He holds two im-

portant positions, one of them non-political, as Chairman of the Parliamentary and Scientific Committee—I shall not refer to that—and the other as chairman of an extremely powerful party group. If he dislikes reference to perfidy, I can only say that, by implication in his intervention, he accepted at least that it was true. He said, "Do not publish it abroad"; but the understanding was that what I was saying was at least true. I am afraid that that is the situation. If this is the situation it is a question of altering the policy, and I hope the hon. Gentleman will use his powerful position to try, even at this late state, to alter the policy. I will give way to the hon. Gentleman.

Sir H. Legge-Bourke: I am grateful to the hon. Gentleman for that. I do not want to delay the Committee any longer, but I should like to say that I certainly do not accept some of the implications of the hon. Gentleman's remarks, and I personally believe that as honourable allies of the United States we are doing the right thing.

Mr. Dalyell: Well, I should like to see the argument developed later in this Committee on how as honourable allies of the United States we are doing the right thing. I hope that the hon. Gentleman will catch the eye of the Chair and work that argument out.

Mr. Brian Walden (Birmingham, All Saints): I apologise for interrupting my hon. Friend's speech, but I would give just one illustration to buttress his case in answer to the hon. Member for the Isle of Ely (Sir H. Legge-Bourke). Of course nobody wants to publicise the situation which exists between us and the United States, but if Lockheed is left holding the bag on this the people who are helping us to sell the Harrier to the United States will not have a cat's chance in hell. There is enormous Congressional opposition to buying British, anyway. We have a strong chance of getting the contract, but not if this is done. There can be no question about that.

Mr. Dalyell: It is this action which plays into the hands of Senator Proxmire; it is a gift to the kind of argument he and those who agree with him are using. People like Senator Proxmire will certainly use this argument enormously to our disadvantage, and the only way it


can be put right is to change the policy. This is a very widely held view, not least in the British Aircraft Corporation. This is the true situation, and if I say it, it is not in any sense of fun, for I do not like to see any British Government, whether of my party or that of my political opponents, getting into this kind of situation. I would much rather it had not come about.
Again, it is all very well to say that this is not the beginning and end of everything; but is it seriously suggested that there is any chance of catching up in this whole family of aircraft? Here the case was well put by my hon. Friend the Member for Nuneaton (Mr. Leslie Huckfield). It is a question of a series of engines. The first and second may not be profitable, but is there any argument that this is not the right line of development? Is anybody saying it is not the right line of development? If so, the argument has not got far——

Mr. Leslie Huckfield: The real profit comes when the company is asked to extend versions of the basic engine. This is precisely the case with the Pratt and Witney JT9D, the TF139, and the CF6 which was the basis of the DC10. All American experience is in line with British experience and confirms what my hon. Friend has been saying. The real profit of engine development comes from extension of a family, and the RB211 is the basis of a very good family.

Mr. Dalyell: Following what my hon. Friend has said, what bothers me is: are we taking the line to an aircraft peasant economy"? The words are not mine but an American's. That is what it is all about. If we do not go along what are accepted as the right lines, then, presumably, we are not continuing on the frontier of knowledge but becoming, in this field, a sort of "peasant economy". This is a serious view, and again, it is not only mine, and I am not coining a phrase for the fun of it. This is the kind of argument which really has to be taken into account.

Mr. Michael McNair-Wilson: As has been said already in the debate, this engine is wanted for only one airbus, which is not a winner. Other companies are going for an American engine. Nor is there necessarily a suggestion that

there is to be a stretched version of this project anyway. The hon. Gentleman is arguing for simply one engine for one aircraft which is not a winner but lost the race.

Mr. Dalyell: In the light of our experience of lack of orders for Concorde, I find that argument quite grotesque.

Mr. Leslie Huckfield: I am sure that the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) realises that before Lockheed had to face this debacle as a result of the activities of the Front Bench opposite, it was confident of the possible order position, which was almost the equivalent of the order position of the DC 10, and both the DC 10 order position and the TriStar order position were immaculately an improvement on the A300 B order position. I am sure that he will also realise that the linchpin in TriStar getting the equivalent order position of the DC 10 was the Court Line order, which hinges very much on the RB211.

Mr. Dalyell: This is a fairly full explanation of the position, and, as I say, I find the intervention of the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) quite grotesque.

Mr. Michael McNair-Wilson: The facts are quite simple. We know that 128 TriStars have been ordered, and these 50 for Air Holdings. The DC 10 is well over the 200 mark. The hon. Gentleman cannot tell me that over 200 DC 10s equals 128 TriStars, because, clearly, they do not.

Mr. Dalyell: This is an extraordinary argument, particularly in connection with the potential orders from Delta Airlines, Eastern Airlines, and TWA, and, indeed, from Britain. Otherwise, one has to buy across the exchanges.

Mr. Benn: Is it the view of the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) that if in future a British engine gets into an American or a European airline and within a year or two of the aircraft being launched that engine and that aircraft are second in the race, we are then to say: "This is not worth pursuing"? The logic of what is being said is that no one would ever trust a British aero-engine manufacturer again because he had knocked the project


into which his engine had gone and he would not be taken seriously. The logic of this would be destructive of our export effort.

Mr. Michael McNair-Wilson: Once upon a time we may have imagined—the Europeans certainly imagined—that there would be a Rolls-Royce engine of the RB211 type in the European airbus, and also a RB211 engine in the Lockheed TriStar. We were therefore to get a number of aircraft using this engine. We know that the last Government did not see fit to support the European airbus, and that must have prejudiced the chances of the Rolls-Royce engine being put in that aircraft. So much for European collaboration. We know that they finalised down to the single Lockheed project, and everyone knows that Lockheed has not and does not look like having an airbus which will sweep the North American market. This is a matter of fact. It is a question not of being second but if not even being in a break-even position, and heaven knows where the orders are to come from to put it in that position.

Mr. Dalyell: The hon. Gentleman having supported the Government's decision, I am rather amazed at his intervention.
The next issue is the reaction of the Americans. After all, when any of us are treated with a lack of candour, how do we react? I do not want to burden the Committee with that too much, because it has been put by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), but Ministers must understand the feelings of American executives in international companies when they have been treated with a lack of candour.
My right hon. Friend has described the very different way in which Lockheed treated him when it was in difficulty, and I should have thought that the least we could have done was to treat Lockheed and the United States with the same degree of candour as that with which they had had the courtesy to treat us. A good deal more has to be said, even tonight, by the Government about the replies they have given to those on both sides, who want to protect the good name of Britain against charges of lack of candour. I respect the Parliamentary Secretary in many ways, from many years of

association with him, and I hope that he will give us some kind of answer that we can pass on at the weekend when we see the Americans who are making these charges.
1.45 a.m.
The Minister went on to the question of needing more time. I can sympathise with him, he having sat late into the night round some sub-committee table wondering how he could get more time. But are we completely wrong in thinking that an indemnifying Bill would have done the trick? If we are wrong, the situation should be spelt out. Would an industrial expansion Bill have done the trick?
I return to the argument put forward by my hon. Friends the Members for Glasgow, Craigton (Mr. Millan), Heywood and Royton (Mr. Barnett), Ashton-under-Lyne (Mr. Sheldon) and myself. We all asked what on earth was happening between 22nd January and 3rd February. How was this time used? There is no clear picture. We can read the Sunday and Monday newspapers for a long time but no clear picture emerges. Any picture that emerges is the result of speculation. Before we go home for the weekend we should be given an indication whether the Government will reveal, and perhaps justify, what they did in that crucial period.
I am not clear what is to be the next step in the investigation. Is it to be a Select Committee of the House of Commons? Is the matter to be given to the Select Committee on Science and Technology, which I believe is already heavily burdened? Or is it to be done by a tribunal? Tribunals have been set up to deal with much less serious matters than this. They have been set up to deal with matters concerned only with the past, and I am not over-concerned with the past——

The Temporary Chairman (Mr. Harold Gurden): Order. Will the hon. Member relate his remarks to Clause 1?

Mr. Dalyell: Yes, Mr. Gurden.In this matter we must address ourselves to the question of the way in which we should react to the situation. The purpose behind the Bill is to take account of the fact that Rolls-Royce may not be the last concern in which we shall be involved in this kind of agony.


I hope that it will be the last; I hope that this kind of thing will never happen again. But it might happen again. If it does, I hope that there will not be the same kind of reaction. If the Government say that firms must stand on their own feet, and uphold that kind of oppressive philosophy, right or wrong, we must be prepared for the reaction—because the gut reaction, or the immediate reaction, is very important.
The Minister of Aviation Supply said that Short Brothers and Harland would be seriously hit. I speak with some feeling on that question, because, with the exception of the former Prime Minister, I probably represent more Irish constituents of the first generation than any other hon. Member, and, therefore, have a vicarious interest in Ireland. There is a chronic situation there. I wish that the hon. Member for Belfast, East (Mr. McMaster) who often talks of Short Brothers, was here.
A serious question arises, first, in connection with regional policy and, secondly, in connection with the question of the thought that has been given to the effect upon the unemployment situation in Northern Ireland of Short Brothers being seriously hit. I do not know of any proof that unemployed men create more difficulty in Northern Ireland; but there is no proof that they do not. Therefore, the Government should take the earliest opportunity of saying what they propose to do about Short Brothers and Harland, how it is to be preserved and what kind of work will be sent there instead of TriStar work, because we have heard from the hon. Member for Belfast, East how the firm of Shorts is involved up to its neck in this matter. The Parliamentary Secretary should deal with this issue in his reply.
The next issue concerns the unquantifiable claims by Lockheed. I return to a question asked earlier by the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd). What is known about the issue of penalties? At what stage were they discussed? Was the issue of penalties discussed between 22nd January and 3rd February? We deserve a factual answer. If we are not to have a tribunal or a Select Committee, this is the only opportunity we have of delving into these

questions. We should have an answer on the question of penalties.
The next question raised by the Parliamentary Secretary concerned the issue that is urgent to many of us, namely, relations with suppliers. He gave a long answer to my hon. Friend the Member for Heywood and Royton. I know that there are difficulties with the post, with which I can sympathise. But what has been done by the Parliamentary Secretary's Department to contact the major suppliers? My information is that they have not heard so much as a cheep from any Government Department, unless they have physically gone to London. It is my impression that the officers of the Departments, who often serve the regions very well, have not been given any kind of instructions about how they can be helpful.
Whereas my hon. Friends the Members for Derby, North (Mr. Whitehead) and Nuneaton (Mr. Leslie Huckfield), who have Rolls-Royce factories in their constituencies, may be in a more difficult situation than those of us who represent suppliers, we have, if not the greater, then the more urgent problems. Decisions will be made this weekend.
The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office, is present. He is not smirking or smiling, but he is wondering why I am going on. I have news for him. Tonight I telephoned the general manager of the New Town Development Corporation at Livingston—a great growth area—where there is a figure of 18 per cent. unemployment among males. If I speak at inordinate length, it is because I want to change the policy, because unless the policy is changed, Concorde and Harrier are in jeopardy. If they go, we can say goodbye to certain great factories which the hon. Gentleman and I would consider essential to the growth of the Scottish economy.

Mr. Leslie Huckfield: I agree with my hon. Friend about the immediacy of the suppliers' problems, because in my constituency—perhaps my hon. Friend's experience is the same—lay-offs and redundancies have started already. A lot of people, including hon. Members on both sides, have been under the impression that the lay-offs and redundancies have not started; but they have. Certainly in


the Coventry area, where we have had lay-offs recently at Alfred Herberts and other factories, there is an overall atmosphere of great uncertainty. If it is bad in the Coventry area, it is bound to be much worse in the area which my hon. Friend represents. An assurance should at least be given to the firms and the employees whose jobs are at stake to ease their troubled minds a little.

Mr. Dalyell: It is the overall uncertainty that is very bothering. Serious people at Livingston and in the Scottish trade union movement are afraid of a chain reaction. The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) should ask the Secretary of State for Scotland in the morning what kind of answer the Scottish Trades Union Congress can expect when it meets the Prime Minister, as I hope it will. I hope that it receives as good an answer as it got when Harold Macmillan was Prime Minister.
When one has 18 per cent. unemployed in a new town area, when one has over 300 unoccupied houses in a new town, when this situation has blown up in a very few weeks, when there is a fear of a chain reaction, one does not worry too much about taking up the time of the Committee at inordinate length, because there is no indication from the Government that they propose to step in and do anything about it.

The Temporary Chairman: Order. I have listened to all of this debate. The Chair has been pretty generous, but we must stick to what is in the Clause.

Mr. Arthur Lewis (West Ham, North): On a point of order, Mr. Gurden. The Clause says that it gives the Government powers to take over certain factories and so on. My hon. Friend is suggesting that if he agrees to the Clause an existing situation might well get worse. Before agreeing to its standing part, he wants an assurance on whether his constituents will be worse off with regard to unemployment, housing and so on. Surely, that must be relevant.

The Temporary Chairman: Order. The Chair owes it to the Committee to remind hon. Members that we are discussing the Question, "That the Clause stand part of the Bill." That is all that I was doing.

Mr. Dalyell: I am not filibustering. I am merely pointing out that there is a critical situation. Any joy that we might have had from having a special development area in the West of Scotland, which does not include my constituency, is completely offset by the Rolls-Royce situation, which is the subject of the Clause, I accepted the special development area decision in the spirit in which it was made.
Things like the Rolls-Royce situation have chain reactions. If money is to be earmarked for the development areas, let it be put now into Rolls-Royce at Hillington or elsewhere, because it is urgently required, rather than into the special development areas, League Division 1. in the future.
I return to the Minister's speech. In all this controversy we have listened longer and longer to references to the management of Rolls-Royce. Sir Denning Pearson was a friend of mine, is a friend of mine, and, I hope, will be a friend of mine, so I have in a sense a prejudice to declare.
But what is all the business of saying that the middle-level management was less than it should have been? That is slightly glib. I do not say that it was perfect in all it did. My hon. Friend the Member for Nuneaton (Mr. Leslie Huck-field) and I, and others of us on the Labour Party aviation group, have seen a good many Rolls-Royce executives, and we know that before sweeping statements like that are made there should be some evidence. I hope that if they had any faults those faults were not markedly greater than those of Pratt and Whitney, nor markedly greater than those of many of the mergers of General Electric.
2.0 a.m.
This is a very difficult industry. Furthermore, what evidence is there that if Rolls-Royce had had a resident financial genius—I am not saying that Ian Morrow is one; he might not claim that himself—for five years, in the light of certain decisions it would have made more than a marginal difference? It is Sir Denning's view—he has taken it modestly and well, without rancour or bitterness—that even if Rolls-Royce had had an expert resident accountant, given the policy, the decisions and costs would not have been more than marginally different.


Rather than make glib statements, the Committee should look at this at a rather deeper level. One of the problems is what happens when a firm grows from being middle-sized to being a really big one. Is it any accident that Rolls-Royce had many problems which were new to it when it merged with Bristol-Siddeley? People in Leyland's have said that their worries really started when Leyland's merged with B.M.C. The hon. Member for the Cities of London and Westminster (Mr. Tugendhat), in his maiden speech, had a very important message about what happens to managements when mergers take place of this order.
The next issue on the Minister's speech is the question of the airlines. I understand that there has been a statement by Delta, Eastern Airlines and T.W.A. It may be an amplification of a statement in the Daily Telegraph that they had unofficially approached Lockheed, Rolls-Royce and the British Government. Is this true? The power of a purchaser is very great. It may be that they have found what we suspect is true—that it is extremely difficult, granted the TriStar frame, to have any kind of interchangeability of engine.

Mr. Leslie Huckfield: My hon. Friend will realise that, with the size of orders these airlines have taken, it will also be very difficult for them to switch to the DC 10. When one considers the magnitude of the individual orders which airlines like Eastern and T.W.A. in particular have put in, they would have to go to the back of the queue for the DC 10. It is not just a matter of having an alternative engine, which in itself would present many difficulties; more difficulties would be presented in switching to an alternative aircraft. These airlines are committed in a very technical sense to the TriStar.

Mr. Dalyell: This is an important issue. Interchangeability is very difficult, according to our information. The airlines might be more co-operative than the Government think. It may be surprising to the Government to learn of the degree of co-operation by the airlines before any final decision is taken. I hope that at least senior officials, if not junior Ministers, will go and talk to Delta and Eastern and the other potential customers.
I do not want to keep the hon. Member for Derbyshire, South-East (Mr. Rost) here. I will make my point and then release him, as it were. He said that firms believed that they were in partnership with the Government. We are talking again about sub-contractors. My view is that there is a whole grey area here as to what understandings were given and what were not given by both this Government and the last. What is true is that some sub-contractors, at any rate in their minds, perfectly honestly felt that they were in partnership with the Government. I agree with the hon. Member for Derbyshire, South-East that these are people who honestly believed that they were in partnership with the State. In this sense, there is a moral obligation to do something about it. It is just one more argument for the subcontractors.
Another issue raised by the hon. Member for Derbyshire, South-East, to whom I listened with great attention, was that of workers' shares. Without being difficult about it, I must say that we did not get any kind of answer from the Minister. He said that it was peculiar. You bet it is!
Are workers' shares to be treated differently from other shares? Are some shares to be considered more worthy of help than others? I would go a long way with the argument that workers' shares should be treated differently, but here we are enunciating a new doctrine, and there are important issues of principle. Everyone agrees that workers' shares in Rolls-Royce should be protected, but what about the shares of pension schemes, some of which have in-vested in Rolls-Royce? Although its shares are widely spread across the board, as would be done by any prudent insurance organisation, I.C.I., for example, has invested relatively heavily in Rolls-Royce shares. Should such shares be peculiarly protected? In the absence of a Select Committee, this is the only occasion on which we may ask such questions. Again I hope for answers.
As the hon. Member for North Angus and Mearns is still here, I should like to return to the ramifications of this decision which those of us in the development areas will have to face. Earlier today I was talking to senior officials


of the South of Scotland Electricity Board who reckoned that in the Bathgate area the loading because of the Cameron situation, would be 40 per cent. less. This is just one example of how the effects on industry will go right across the board. That is why the whole social and industrial situation has to be taken into account.
What is our vision of the future of Rolls-Royce? Is it to become simply a repair organisation? I am not sure that an engineering firm like this can stay static; it must move forward, or it will go back; it cannot stand still. It must be understood that unless it continues its research at the frontiers of knowledge and goes forward, there will be a danger of its going back.
In all the statements, especially those of early on, little has been said about the role of the joint stock banks. Why was it that Lloyds and the Midland, as I gather from the Press, took fairly hurried decisions which brought the crisis to a head? Were there discussions with the joint stock banks, or did they take that action off their own bats?
I have mentioned Lazard Brothers. I am not interested in vilifying anybody and I do not suggest that Lazard Brothers has done anything wrong, but we are interested in what Lazard Brothers is doing about the future of the company. In the next few weeks the role of the merchant banks will be important, and we have not had any indication of the role which the Government intend that they should play.
Timing comes into all these banking decisions. I do not think that the Government have understood the issues. It is no good the hon. Member for Bradford, West (Mr. Wilkinson) saying that the engine was very late. Late by what criterion? Later than it was said it would be, granted. But later than any alternative engine? Certainly not. Late by the standards of anything that Pratt and Whitney or G.E. might produce? Certainly not.

Mr. Wilkinson: Will the hon. Gentleman accept that in commercial terms the engine was so seriously late as to mean that very grave penalty sanctions would have to be imposed upon Rolls-Royce in addition to the over-run of £110,000 per engine which the company was having to pay anyway? It was that factor that

led the board to its decision. On the technical point, of course, the Pratt and Whitney and General Electric designs were there, because they were more "state of the art" engines. They were two-shaft. I understand that, but from the point of view of the financial future of Rolls-Royce the lateness in producing the engine had the most serious implications.

Mr. Dalyell: I would agree that this question of being with the "state of the art", as the Parliamentary Secretary describes it, is important. I am not filibustering, but this raises a subject about which we have not been told sufficient; namely, the question of the penalty clauses. What discussions took place about the activation or non-activation of these clauses? This is the sort of thing that should have been discussed in private first. It is all very well to say that a lot of milk has been spilt about penalty clauses. That will not cut very much ice with the constituents of my hon. Friend the Member for Derby, North.
Some of us believe that Lockheed and Mr. Haughton would not have talked so much about penalty clauses and there would not have been so much talk about such things in the United States if the Government had treated them with candour and taken them into their confidence at an early stage.

Mr. Wilkinson: Lockheed would have faced most serious penalty clauses with its customers who stood to receive the TriStars, for which they had options, extremely late. That is another factor.

Mr. Dalyell: This is why it is almost illiterate not to talk to Eastern Airlines, Delta and all other potential customers. If anything comes out of this exchange, it is the need for an urgent conference of potential purchasers. I have heard nothing this evening to say that such a conference will take place, and so I ask the direct question: what plans have the Government for a conference of purchasers, preferably behind closed doors? Certainly no one on this side of the Committee would make any trouble and ask about what was said. [Hon. Members: "Oh!"] If we appear to be unhelpful, it is because we have faced a chronically difficult situation. The Minister was out when I explained about the 18 per cent.


unemployment in the new town of Livingston. This is the sort of pattern repeated all over the country and the sort of general reaction that is feared.
The Minister did not have time to answer some of the specific questions of interpretation What was meant by the Solicitor-General when he said that suppliers need not reach adverse conclusions? Why should suppliers reach adverse conclusions? What am I to say, this very day, to people who ask: Why should we not pay off even more men? The Cameron Works paid off 200 yesterday and 90 members of staff. Other firms in Scotland may follow suit. In the North of England and other areas—in and around the Minister's constituency—it is probably worse. What are we to say to them? Why is it that suppliers are not to reach adverse conclusions? As the Member who agitated for the Solicitor-General's appearance, with less manners than I hope I usually show in this Chamber, I thought it was the most barren speech from a law officer. After all, the hon. and learned Gentleman may be busy with the Industrial Relations Bill, but he has the most powerful civil service team at his command.

Mr. Corfield: My hon. and learned Friend has five.

2.15 a.m.

Mr. Dalyell: There was a very powerful team in the box when the hon. and learned Gentleman appeared. These are able people. Surely if the policy had been brought out they could have briefed him.
We still have not discovered why suppliers need not reach adverse conclusions. So we go away empty handed on that.
I am not being pedantic or quibbling, but I come back to the question: what is an acceptable bidder? The Minister says that we must sell certain units—what units is unclear—as advantageously as possible. The Solicitor-General and others have talked about an acceptable bidder. The two may not be mutually antagonistic, but at least they have to be reconciled and something needs to be said about them.
What are the criteria of the acceptability of a bidder? That is a question which I shall go on repeating.

The Chairman: Order. The hon. Gentleman must not go on repeating it. Otherwise it will become tedious repetition.

Mr. Dalyell: I was hoping that I should not have to make a Third Reading speech. If I get answers to the questions which I am putting I shall not make a Third Reading speech.
Again, no real answer has been given about Section 332 of the Companies Act. What efforts were made for a renegotiation? If anything has come out of the debate, it really is that it is balderdash to suppose that all this had to happen because of Section 332. This is a grotesque excuse. I cannot believe that the British Government were bogged down like that. If they let themselves get bogged down like that, they certainly should not have done so. I do not know whether they are meekly taking the advice of the Law Officers of the Crown. Lawyers are not infallible. In fact, sometimes in this kind of situation they are very fallible.
I must ask about the "reasonable prospects" of creditors being paid. Who judges what are "reasonable prospects"? I am not playing with language. This is the phrase which the Government have used. We want to know what they are up to.
Again on the issue of law, what was done to find out about the law of the State of New York? It seems absolutely incredible that we should go ahead with projects without inquiring about the law of our partners.
New week Assemblyman Stein is coming to see some of us. As far as I know, there has been no indication yet from the Government that they will see him. But his visit is crucial to the future of Concorde. If it does not land at New York or New Jersey, I am not sure where on the Eastern seaboard it will land. These seemingly small points appear to have gone unthought about.
The hon. Member for Langstone, who made an outstanding speech—one can understand why he was Keynes's favourite pupil, or one of them—asked a number of interesting questions which should be repeated. One question was: why was it that on 3rd February there appeared what looked like a leak from the White House? This question was


asked by the hon. Member for Portsmouth, Langstone, and it deserves an answer.
The hon. Gentleman also asked: did Lockheed do any talking about penalties? That, again, is a question which deserves an answer.

Mr. Corfield: I have answered it. I said, quite clearly, that it was put to Mr. Houghton whether he could do anything about penalties, and he said, quite definitely, "No". How many times it was put I do not know, but I put it myself, and I told the House that I had put it. It is no use trying to answer the hon. Gentleman if he goes on asking the same question. I gave a clear answer.

Mr. Dalyell: It may be my misunderstanding of the situation. When I heard this I thought that it was only at the most recent discussion. In the discussions which took place before the announcement was made, before anything became public but when something of the situation was known from November onwards, were there any discussions about penalties? This is a crucial issue. If the Minister feels aggrieved at my going on asking these questions, let me tell him that a lot of trouble would have been saved if the Government had had the courtesy to set all this out in a White Paper. Had they done that, I should not have had to make this speech.
It is all very well pretending that questions have been answered, but on three occasions the Minister was asked questions about the M.R.C.A. What discussions have taken place with Panavia and the consortia? What discussions have there been with the Italians?

Mr. Corfield: The Vice-Chief of the Air Staff went to Germany coincidentally with the time that I was making my statement to the House, and he has had conversations with the German Defence Minister.

Mr. Dalyell: I am genuinely glad to hear that. I do not know whether my hon. Friends knew that, but I did not, and that adds to knowledge, and it is rather important knowledge because, if we are to have the M.R.C.A.—and I have expressed grave doubts about it, but it is now a forward project—we want to know what the position is. Not only we want to

know, but the factories involved in creating the M.R.C.A. want to know.
I think that a great deal more information has to be given at some time, perhaps not tonight, on the whole issue of S.N.E.C.M.A., because it is my information that this is not an altogether natural or easy merger, and just to say that we want a European industry seems often enough to be taking refuge in some kind of cliché. Once we begin to talk in slogans, we get into great difficulties. There is great danger in thinking of slogans. Throughout this whole episode there has been far too much sloganising, without any depth of thought behind it, and this creates troubles.
The Minister will remember that I questioned him at some length on the post-Apollo programme, and that there have been Adjournment debates on this subject. This is a very important, and not an esoteric, issue——

The Chairman: Order. I should be glad if the hon. Member would address the Chair, because I have to watch very carefully what he says, and I cannot hear if he turns his back to me.

Mr. Dalyell: I apologise, Sir Robert. I simply say that I had a meeting-and I am at liberty to say this-with a senior member of the British Aircraft Corporation this very week. He is a man who has great knowledge of these matters. He was a member of the Department of Trade and Industry when it was the Ministry of Technology, and he is desperate to know the outline policy, because B.A.C. is under contract with North American Rockwell, and the whole future of Rolls-Royce——

The Chairman: Order. I must ask the hon. Member to relate this exactly to the terms of the Clause. I think he will agree that I have not bothered him unduly, but I think that the Committee is entitled now to have the hon. Member's speech related to the Clause in question.

Mr. Dalyell: I do not want to abuse the procedures of the Committee, and I never have. I shall come to an end, because I have been speaking for nearly an hour. I do not apologise for that. Every issue concerns many people, and I simply say that if we have an offer on the table, as we have from N.A.S.A., if we have to give answers to M. Lefevre, the Belgian negotiator and other European


countries, if we have to resist the cause of the French national programme C.N.E.S., we at least have to be certain that Rolls-Royce is in existence and that its suppliers are in existence.
The point made by my hon. Friend the Member for Dudley (Dr. Gilbert) cannot be reiterated too often. If, over the next few weeks—and it is a matter of the next few weeks, and in some cases days—these supplying companies, the sub-contractors, go out of business, Rolls-Royce will find it extremely difficult to operate. Either they will not have the supplies at all or they will have to go to sub-contractors abroad, who will probably have to do constant re-jigging at the shortest notice, and this will create an even worse mess. So the whole policy is at stake, a policy which affects almost every constituency in the country. I have spoken at great length at a time of night when I do not normally make long speeches, but I cannot apologise, because these are issues which deserve a reply.

Mr. Arthur Lewis: I had not intended to take part in this debate, but my hon. Friend the Member for West Lothian (Mr. Dalyell)—I do not think that he spoke at great length—did not go into enough detail on his admirable suggestion about having a tribunal before agreeing to the Clause. The House should have more information, and from a source which is not biased for or against the Government.
The Clause says:
There may be defrayed out of moneys provided by Parliament any expenditure which a Minister of the Crown may, with the approval of the Treasury, incur …".
That is carte blanche, an unspecified amount. It could be hundreds of millions or thousands of millions. It says that that money shall be used
with a view to or in connection with the acquisition for the benefit of the Crown …of any part of the undertaking and assets of Rolls-Royce Ltd.
or any of its companies.
I should like a thorough investigation of whether the Government should have this power. This could be untold millions. Only this week there was published the independent report of the Wilberforce Committee on whether or not a few million pounds—or a few hundred thousands even—should be given to

workers. This independent body, which happened to be chaired by an ex-Tory candidate——

The Chairman: Order. I am sorry to interrupt the hon. Gentleman, but we shall have to come more strictly to the terms of the Clause.

2.30 a.m.

Mr. Lewis: But are we or are we not discussing Clause 1, and does it or does it not say that unlimited money should be provided for the purchase of the specified company? I cannot see why I should give this authority to the Government. Therefore, I am inclined not to agree that the Clause should stand part of the Bill until I can be assured that the Government are capable of looking after unlimited sums for the purpose specified in the Clause. I distrust the Government. I do not think that they have the ability, the political knowledge, or the right Ministers properly to spend unlimited funds which the taxpayers will have to find. Many millions of people showed at the General Election that they do not trust the Government. Therefore, there should be an investigation into whether we should give this authority. Before giving this authority we might consider having an independent inquiry.
The inquiry could take one of several forms. There was the Bank Rate Tribunal which inquired into an incident which involved no money. However, here the Government want untold millions so that they can take over a company which may or may not be good. It may not be an asset to the nation if it is acquired.
The ideal committee of inquiry might be one like the Wilberforce Committee, because Lord Wilberforce, as a former Tory candidate, must be unbiased. Who could be more unbiased that a former Tory candidate? One of his colleagues on the Committee—a director of Guest, Keen and Nettlefold—is also a Tory. He, too, would probably be unbiased. As he gave about £20,000 to Tory Party funds, he is, if possible, even more unbiased.

The Chairman: Order. The hon. Gentleman now goes a little far in suggesting the qualifications of people who might be appointed to such a committee, although I am prepared to accept the main thesis of his argument that there could be such a committee.

Mr. Lewis: I am glad, Sir Robert, that we have agreed between us that my suggestion of a tribunal is valid.

The Chairman: Order. I am not to be put in the position of expressing an opinion on the merits. I am here only to decide whether the hon. Gentleman's speech is in order. I think that what he said was in broad terms in order. If he pursues it, it will be out of order.

Mr. Lewis: I am trying to help the Government and point out how unbiased such a committee would be.
Rolls-Royce workers will be affected. Indeed, they are affected now. Whether the Clause is ordered to stand part of the Bill or not, the hours, conditions, wages, pension rights, and so on of the workers will be affected. In view of the way the Government have treated workers in general so shabbily, I do not know whether I can permit myself to authorise the Government to take over a company like Rolls-Royce and be responsible for its workers. Every day I hear the Government viciously attacking the working class and trade unionists. Therefore, knowing that they are viciously anti-trade union and that the workers of Rolls-Royce are good trade unionists, I wonder whether I should trust the Government to deal fairly and properly with these workers and look after their interests if the Bill were passed. I may be wrong in my impressions but——

Mr. Patrick Cormack (Cannock): You are.

Mr. Lewis: The hon. Gentleman as interjected from a sedentary position. He was not in the Chamber when my hon. Friend the Member for West Lothian (Mr. Dalyell) gave the facts and figures to prove that the Government have already put out of work 18 per cent. of his constituents in one new town. That is not a laughing matter. It is all very well for people in employment who have a good salary at the end of the week. These Rolls-Royce workers are not getting salaries or wages. If the Government take over, I have doubts whether they will look after the workers' interests.
I agreed with my hon. Friend when he said how much he admired and respected the directors of Rolls-Royce. I am not saying anything against them. I know none of them. By accident I happened to

read in the Press, when this tragedy was reported, that one of the directors said, "I'm off. I'm going to the Arctic region." He has been a company director all the time, drawing his fees no doubt, and he has decided now to go on a £2,000 tour of the Arctic region.
I should like to know to what extent the workers will have their conditions safeguarded. I am not so much worried about the directors. Knowing the directors, no doubt my hon. Friend the Member for Dudley has a good word for them. But I am interested in the workers rather than the directors. If the directors are able to go on £2,000 trips, I assume that they will not be too hard up and will not be drawing supplementary benefit. The workers may well have to draw it.
I assume that if the Bill is passed a board of directors or a Government board will be established.

Mr. Michael McNair-Wilson: Is the hon. Gentleman trying to say that he would like to have seen Rolls-Royce go bankrupt and be sold to private enterprise? Is it the nationalisation which worries him? Is it that which he feels will not safeguard the workers?

Mr. Lewis: The hon. Gentleman is asking me to be tedious, and that would be out of order. I thought that I had made it clear, certainly to you, Sir Robert, and that what I was saying was clear enough for anyone to have understood. I have nothing against the board of directors of Rolls-Royce or the workers of Rolls-Royce. I am against the Government because I do not trust them. They do not have capable Ministers, the political judgment or the people able to spend unlimited money. My attack is upon the Government. I have had proof almost every day of every week of every month of the year that since their election they have been deliberately attacking the standard of living of the lower-paid workers.
I cannot trust this Government. They have declared that they will slash workers' conditions in the public sector. They are in the process of attacking the Post Office workers, who are out on strike. The Government are responsible. They have attacked our refuse collectors and municipal workers. They have attacked the power workers. They have attacked all


our lower-paid workers, and they are trying to stop them getting a decent standard of living.
How can I trust this Government? If they take over Rolls-Royce, under Clause 1 presumably they will appoint a board of directors to run the company. I am all in favour of keeping the company going. I am not against Rolls-Royce. I am against the Government. If the Government appoint a board to run the company, can we be sure that it will be the right kind of board?

Mr. Cormack: Does the hon. Gentleman want a job?

Mr. Lewis: I could not make a worse mess of it than the directors of some companies that I could name. I will not name them, of course, but I am sure hon. Gentlemen can guess who I mean. I do not think that I could trust any directors appointed by this Government. But certainly not me: no one would ever appoint me. I am not an ex-Tory candidate.

Mr. Cormack: We would not have the hon. Gentleman.

Mr. Lewis: I am not the sort of person who would give way to this Government's directives to keep down the wages and conditions of lower-paid workers, whereas the directors appointed by the Government would be compelled to carry out the policies now being forced upon the other nationalised industries.
Whether it be the Coal Board, the Post Office, or any other industry in the public sector, these boards are attacking the standard of living of their workers. That is why I doubt whether I should agree to this Government having unlimited funds for the purpose of taking over Rolls-Royce, establishing a board to run the company which will be weighed down with reactionary Tories—because very few Tories are not reactionary—and then, if past experience is any guide, attempting to attack the standards of the company's workers.
When the board is appointed, shall we have the usual course of action that this Government have adopted since they have been in office? Will the directors get £20,000 salaries? Shall we see a number of part-time directors appointed at £10,000 a year? Will the directors then

turn round to the Rolls-Royce workers and tell them that they cannot have an extra £1 or £2 a week in wages because it will be inflationary and against the dictates of the Government's policy?
If we agree to Clause 1 we shall give authority to this inept and very bad Government to make use of unlimited funds. If the Minister assures me that the unlimited funds will be used to give Rolls-Royce workers wage increases, I may be persuaded to support the Clause, but if those funds are to give well paid jobs, with all the "perks" going with them, to ex-Tory Ministers, ex-Tory judges or ex-Tory candidates, I shall have my doubts.

2.45 a.m.

Mr. Michael McNair-Wilson: The hon. Gentleman's whole argument is callous. He wants to set up a committee and he wants to spend months looking into the abilities of the Government or the company to look after its affairs. What happens to the workers who he himself admits will have no wages? He shows no concern for them at all.

Mr. Lewis: No. The hon. Gentleman does not realise that the Government can get a committee moving in two or three days, and, if it suits them, get a report literally overnight. The Wilberforce Inquiry took only about a week. But even then, with their 8 guineas a day expenses, and 16 guineas for the chairman, the Wilberforce Committee went into recess for three or four days. Just after a serious fuel and power crisis, it went on strike, not sitting for about four days.
The terms of reference of such a committee could require it to go into the matters which my hon. Friend the Member for West Lothian has raised, and, what is more, could require it to sit night and day, as we are doing, not on a 9 till 4 routine, until it produced a report. I should like a committee to go into wages and conditions, and also to investigate why this tragedy took place and who was responsible.
This week we have been debating the question of lost hours of work and lost production through strikes. Yet hundreds of workers are about to be put out of work. Thousands are already out of work, and there is the possibility of hundreds more joining them. But the Government are not anxious to have an investigation to ascertain the reasons why


this has happened. Always we are told it is the workers who are responsible, because of strikes.

Mr. Michael McNair-Wilson: Mr. Michael McNair-Wilson rose——

Mr. Lewis: In a moment. The hon. Member, who may or may not have been here during the debates on the Industrial Relations Bill, should know that we were told all the time that it is the workers who are to blame. It may be that in this case they were to blame. I do not know. It may be the directors who are to blame. It may be the financial advisers of Rolls-Royce who are to blame. At the moment no one knows who is to blame, and I am suggesting that before we pass this Clause we ought to have a thorough investigation into all the aspects of this business to see who is responsible for the collapse of Rolls-Royce. Is it the directors who have fled the country and gone on a tour? Is it the directors who have remained here? Is it the workers on the job? Is it the foremen and chargehands and technicians? No one knows.

Mr. Michael McNair-Wilson: In his search for information, has the hon. Member ever sought to ask his right hon. Friend why the I.R.C.'s Report was not made available to the House?

Mr. Lewis: I think that if I were to ask that on this Clause I would be out of order, because that is something which is past and is not relevant.

Mr. McNair-Wilson: It is very relevant.

Mr. Lewis: It is not relevant, because I am adducing reasons why I should not support this Clause. I cannot see why it would be relevant to see whether or not a report which has already been drawn up should or should not be published. I think that Sir Robert would then say that that is not relevant to the Question, "That the Clause stand part of the Bill."
There are a number of points in this Clause to which I take strong exception. I should like to know what "any expenditure" means. The Financial Memorandum is wider and says that the Government cannot give any undertaking whatsoever of what money is to be spent on this venture.
That leads me to my next point. Can the Government give me an assurance that from this unlimited sum there will be money to look after the Rolls-Royce people who are now suffering?

Dr. Anthony Trafford (The Wrekin): You have developed five or six points of criticism of the Rolls-Royce management and of the Government and have ended each one with the phrase "of which I know nothing". I wonder if you would like to explain why you do that if you do not know.

Mr. Lewis: Three or four times, Sir Robert, the hon. Member has accused you of knowing nothing and of not knowing what you are talking about. I would never do that. The hon. Member must be careful how he chooses his words. I did not say Sir Robert knew nothing. I said I was not in a position to pass judgment on Rolls-Royce directors or workers or executive staff or financial advisers and the rest, because I have no information on which to form a judgment. Nor has any hon. Member, because the Government have refused to give it. There is no information available. Hence, I was suggesting that there should be an independent investigation into all the aspects of the matter so that we could study it and then judge whether the collapse was the fault of the workers and technicians or of the absentee directors who have fled the country and are doing a world tour. I do not know who was at fault. Hence, I am not going to blame anyone.
Before the hon. Member interrupted me I had started to question the sum of money to be expended under this Clause—for "any expenditure". I was asking what that meant. Perhaps I will give consideration to supporting the Clause. I might be able to support the Clause if the Government were to say to me that in return they would give some of this global sum, which might amount to hundreds of millions of pounds, either to safeguard the jobs of these men or to provide the men with redundancy payments or pensions. I would not mind agreeing to the Clause if the Minister could say, "To all workers who have given 5½ years' service we will give a pension of £5,000 a year for the rest of their lives, as this is the way in which we treat our civil servants and other people who give service to the State."

Mr. Michael McNair-Wilson: If the hon. Gentleman would give a pension of £5,000 a year to any workers who had


worked for five years, why does he find it so difficult to agree to the former Speaker being allowed a pension of £5,000 a year?

The Chairman: Order. That intervention is not in order.

Mr. Lewis: I baited the hook, Sir Robert, but I cannot catch the fish tonight. But if the hon. Member is here at 4 o'clock or 5 o'clock on Monday morning, I will give him the answer.
If the Government were to do as I have suggested, they might then look after those represented by the 18 per cent. unemployment figure quoted by my hon. Friend the Member for West Lothian. The Government did not even attempt to give my hon. Friend any answer, despite his repeated efforts to get one. I therefore ask the Government to tell us what definite action they intend to take in the interests of these people.
The Government tell us that they cannot give any information about what is happening with the negotiations with Lockheed or about what is likely to come out of the Rolls-Royce discussions as to whether or not the RB211 project is to be continued. The Minister told us that it was all very complicated. The Solicitor-General, after five hours of study, could not find the answer, nor could the five officers in his Department. But the Minister must be able to say that, technical and difficult though the problem may be, a remedy must be found for the tragic situation of the unemployed in West Lothian. He could say, "If hon. Members agree to Clause 1, out of this global sum that is mentioned we undertake that the 18 per cent. of unemployed people in West Lothian will be guaranteed a reasonable income." It might not be £5,000, but most would be satisfied with £2,000 a year. If the hon. Member treats West Lothian in that manner he must treat in the same way other parts of the country where Rolls-Royce workers will be unemployed.
3.0 a.m.
The hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson), who kept interrupting me, pointed out that when setting up the inquiry into the shares it was necessary to bear in mind the special relationship of Rolls-Royce workers who have shares in the company.

He said that they should be treated somewhat differently, either at present or in the future, when there was a chance to repurchase. I support the hon. Member in that argument, but I suggest that there is some difficulty about it. I support the principle, but the hon. Member will bear in mind that in addition to Rolls-Royce workers there are the widows and orphans.
We are always being told about widows who have money invested. They, too, will expect to receive special treatment. No doubt some sick and disabled people have shares in the company. They will need special attention. I revert to my biased approach. I admit that I am biased, unlike hon. Members opposite who claim to be unbiased but always support big business interests. I am biased towards trade unions. I know that many trade unions have investments in Rolls-Royce—investments derived from members' contributions. I assume that the hon. Member would go one step further with me. I support him over the Rolls-Royce workers, but I submit that if there is to be special treatment for shareholders those trade unions which hold shares in the company should have special treatment, because they invested on behalf of their members and they are, naturally, entitled to something.
Many insurance, friendly and sick societies are concerned. The Workingmen's Club and Institute Union has investments in Rolls-Royce. The union is the working man's equivalent to White's Club, or the Guards Club, which hon. Members opposite are used to attending. The union can ill afford to lose its investments, and I assume that it would also be entitled to special treatment.

Mr. Eddie Griffiths: My hon. Friend suggests special dispensation for people who have shares in Rolls-Royce and can be said to be hardship cases. Would he include in the list of those to be helped the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson), who said that he was also a shareholder?

Mr. Lewis: I am obliged to my hon. Friend. What he has said will help me develop my point. I was about to explain that all these poor people could reasonably expect to be specially treated. In parenthesis, I would point out that it was not I who made the suggestion; it was


the hon. Member for Walthamstow, East. I am tagging along, giving him a little moral support. If he wants to compensate all these penniless, hard-working individuals, who can ill afford the investments they have in Rolls-Royce, I am a fair man, and I suggest that he, too, would be entitled so to claim. But that leads me to the question: how can we judge who is penniless, and in need?
If I were to tell the average voter in my constituency that a person had £10,000, he would say, "That is a fortune." But £10,000 is nothing to many hon. Members opposite. To many workers in my constituency £500 is a very large sum. I do not know whether the hon. Gentleman has £500, £5,000 or £10,000; it is not for me to investigate.
I return to the question of a committee of investigation. Such a committee might well, independently and without bias and prejudice, investigate whether the hon. Gentleman should be classified among the poor, penniless and hard-up investors who should receive preferential treatment. The committee could also investigate whether the Government should, in the national interest—that is the new slogan being adopted by the Government—appoint the directors. An independent tribunal could not only discover where the fault for the present tragedy lay, but ensure that the mistakes made in the past were not made in future.
Under the Clause a board of directors of the most incapable sort might be appointed—the sort of people the Government would think capable because they judged them by their own standards. We know the mess they have made of many aspects of their own administration. This is not personal, and I like hon. Members opposite even though they may be sleeping or dozing, and I am sure that they would not willingly or wittingly appoint incapable people to the new board of directors; but they might judge that because a man was an ex-Tory Minister or was a strong Tory or had been a business man in another venture which had collapsed he should be appointed as chairman or as a director. That might not be the best answer.
An independent committee might suggest—and this may shake hon. Members opposite out of their slumbers—that Mr. Hugh Scanlon should be chair-

man or that someone like Jack Jones should be on the board.

The Chairman: Order. We are back to where we were before. We had better keep off those personalities.

Mr. Lewis: I will not mention any more personalities. A committee of inquiry appointed to discover the cause of the present situation with terms of reference to find ways of preventing a repetition of it might well make suggestions about appointments to the new company which would surprise even you, Sir Robert, and myself. It certainly might surprise the Government Front Bench. Therefore, I am not sure that enough information has been given to the public, the Press and the trade unions.
I do not know to what extent the Ministers had consultations with the trade unions before introducing the Bill. Has the Minister had full discussions with the Federation of Engineering and Shipbuilding Unions? I am glad that he is nodding his head, though I am not sure whether he is dozing off again or signifying assent. Assuming that he is nodding assent, I should like to know whether the unions have agreed with the Government's approach and have made any suggestions to him. What is the union approach on the matter? Have they suggested that we might have a new system of State boards?
In the past State boards have nearly always been composed of people who have not come from the workshop. One exception is that the last Labour Government wisely appointed one of the workers from the bench in the steel industry. That is progress. Can the Minister give an assurance that if we pass the Clause the board of directors of the new company will include workers from the shop floor? I shall feel much happier if I know that actual workers off the shop floor will go on to the board of directors. They are not liable to make so many mistakes as the financial tycoons and the people who usually have the old school tie and a family tree. I have great confidence in the man on the shop floor, and great respect for him. He speaks not from theoretical knowledge but from practical experience. When he makes suggestions he can say, "I am not working this out on paper. I have actually done


the job, and I know what I am speaking about."
We know how much better it is in this Chamber when hon. Members on this side, not on the Government side, say, "I know all about this subject. I have practical knowledge and experience because I spent my life working in the pit, at the bench, or in the steel industry", like my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) and other hon. Members. They have been on the job of producing the wealth of this country. If there is to be the unlimited expenditure that the Government are asking for, I am willing to give it to people like that. I shall not vote against the Clause standing part of the Bill if the Government can assure me that for the first time in the history of their party there will be not only working class representatives but actual workers with practical experience on the board. In that case I would not mind even supporting the £20,000 a year salaries that they are paying. We shall all contribute towards the unlimited expenditure for which they are asking. It is the workers—and they are in the overwhelming majority—who produce the wealth of the country. It is not we who produce the wealth of the country. The workers produce the wealth of the country which the Government tax, and tax very heavily, and from which they will get this unlimited amount of the money. The money will come from those hard-pressed, under-paid, over-worked industrial workers. I doubt slightly whether it is wise to allow the Government to have unlimited funds. Millions of pounds will be spent under this Clause while at the same time the Government take 6d. off the income tax on the wealthy.

3.15 a.m.

The Chairman: Order. I shall have to warn the hon. Gentleman. I have been listening very carefully to everything he has said. I must consider that he is beginning to get within the definition of the Standing Order on tedious repetition. I do not wish to be unkind to him or to stop him or to fetter his freedom of speech, but that is my judgment, which I have tried to make fairly and honestly. I ask him to pay attention to that and either get on to different arguments altogether or perhaps conclude.

Mr. Lewis: I am obliged to you Sir Robert, but, with respect, I had explained at this moment that Clause 1 says "any expenditure". I was explaining that if the Clause is agreed to—and I do not oppose it—any expenditure under it will be found from the taxpayers. I was explaining why I oppose that.

The Chairman: Order. I do not deny that. I am sure that what the hon. Gentleman says is true. But he has done that a number of times in my judgment. He really ought to consider his arguments very carefully now.

Mr. Lewis: With great respect, Sir Robert, if you look at HANSARD tomorrow you will see that I have only at this moment mentioned how the money has to be raised. It is true that I have explained how the directors and the shareholders and others will be affected, but I have not for a moment explained why I am against any expenditure being given because of how the money is to be raised. I am now going on to say that I am against any expenditure being incurred——

The Chairman: Order. The hon. Gentleman cannot do that anyway.

Mr. Lewis: Are you telling me, Sir Robert, that on the Question, "That the Clause stand part of the Bill", I am not entitled to say that I am against it? The Clause says,
There may be defrayed out of moneys provided by Parliament any expenditure which a Minister of the Crown may, with the approval of the Treasury incur …".
Am I not, therefore, entitled to ask how much money and when and where it is come from?

The Chairman: That is exactly right. The hon. Gentleman cannot do that. That would be raising questions of taxation, which would be out of order.

Mr. Lewis: Then I will leave that point and completely forget any question of how they money is to be raised. I will ask—I think I am entitled to do so—whether any estimate of the total amount of money has been made. I will ask how it is to be raised. I will ask whether, if I start putting forward some suggestions, the estimates the Government can give will give me some idea whether they were right or not.


The lowest estimate is probably £700,000 or £800,000, which is about the amount to be raised by increasing the charges for prescriptions needed by the sick. Is that an under-estimate? Would the amount run into millions, or hundreds of millions, of pounds? Surely the Government can given us some idea. I am sure that hon. Members would not hold them to a million or two either way. Of course we know that they never give reasonable or logical estimates. We know that they waste money and use it in ways which are not in the best interests of the country.
The penultimate lines of the Clause would allow the Government money for making loans to any company. What would be the basis? Would there be any restriction? Would there be interest charges? If so, how much would they be? Would the loans be specified in amount and purpose? Could the sums borrowed be used to obtain the securities of the company? Could the loans be used to help unemployed workers? The Clause is loosely worded, and I should like to ask the Solicitor-General——

Hon. Members: Where is he?

Mr. Lewis: I assume that he is working out legal answers to some of the questions put by my hon. Friend the Member for West Lothian. My hon. Friends have asked a number of questions which have not been answered. I am being charitable and assuming that the Solicitor-General is in his office trying to get those answers. The Clause is not sufficiently definite, and I should like the Solicitor-General to say why it should not include some of the measures being incorporated into the Industrial Relations Bill.

The Temporary Chairman (Mr. Harold Gurden): The hon. Member is now moving towards suggesting what could have been in the Clause. We are now restricted to discussing what is actually in the Clause.

Mr. Lewis: I have been led astray by my hon. Friend the Member for Nuneaton and my hon. Friend the Member for West Lothian. It is naughty of them to lead me astray and take me out of order. I hope, Mr. Gurden, that you will allow me to rebuke them, and I am sure that they will take my rebuke in the spirit in which I give it.
Clause 1 (1)(a) says:
…(whether by a Minister or his nominee …
Who could be a nominee? A trade union official? A civil servant? One of the ex-directors of Rolls-Royce? The Clause goes on:
…or by a company in which the shares are held for the benefit of the Crown)".
I do not know of any company in which the shares are held for the benefit of the Crown except Shell-B.P. That means that Shell-B.P. could come along and be used to acquire or take over some of these shares. Has the Minister considered this? Is it his objective to allow Shell-B.P. to take over Rolls-Royce? How many such companies are there? I can only think of one, but there may be others. Some may not be the best type of company to act on behalf of the Government.
Will the Minister be instructing or requesting such a company to take over any part of the assets of Rolls-Royce? I am not sure that Shell-B.P. would be the best kind of company to do so. It is mainly concerned with oil and its byproducts. If this is what is meant by the Clause I would have grave doubts about supporting it.
3.30 a.m.
The Clause also says:
…or in connection with the carrying on of any undertaking acquired in pursuance of this Act".
What is meant by "any undertaking"? The present rescue operation is to save Rolls-Royce, which is a highly reputable, internationally famed company. Everybody wishes this company to survive and to achieve again its past successes.
Clause 1(1)(b) is very wide. It gives the Minister the opportunity of acquiring "any undertaking". If some of the Minister's Tory friends get their private companies into financial difficulties, the Minister can say, "Under Clause 1(1)(b) we can acquire these undertakings".
What is an undertaking? The Solicitor-General might explain that to us. An undertaking could be a firm—even an undertaking business. I could not agree to unlimited funds being given to the Minister to take into public ownership, under the aegis of the Crown, an undertaking business. I am doubtful whether Tory Members, who are not here now,


would support the Government taking an interest in an undertaking business. But this could happen with such an open-ended opportunity for the Government to acquire "any undertaking".
The Government make vicious attacks on the trade unions. Would they use this power to take over the T.U.C. headquarters? I do not know whether that is an undertaking. The Government might say, "Transport House is a good profitable venture. We will take it over because there is a good property development there". They might classify the Labour Party and Transport House as an asset worth taking over. I could go on.
Some firms in this country are on the verge of bankruptcy due not to maladministration of the directors but to maladministration by this Government. Could the Government, by virtue of this Clause, say to their friends whose companies are on the verge of bankruptcy, "Do not worry, old boy. We went to the same old school; we are members of the same club and the same party. Under Clause 1(1)(b) we have an unlimited sum of money and with a view to or in connection with the carrying on of any undertaking' we are now deciding to take over your company. We can give you good money." I say "good money", but I think the term is "Lolly for the boys."
We know how this Government like to look after the interests of their financial backers. Firms which have given large sums to Tory Party funds might get paid back twofold and threefold. Guest, Keen & Nettlefold—that surely is an undertaking—is a good example of a great contributor to Tory Party funds. The firm might find that it pays it to have a rearrangement, about which the financial wizards could advise it, and to say, "Let us go bankrupt. Let us have a share-out of the spoils. Just as we are on the verge of bankruptcy, and after we have shared out the spoils, we shall ask the Government to come in and use the provisions of this paragraph to take us over." If that were to happen we, the ordinary taxpayers, would have to pay for it, and I am not sure that I can agree that that should be done.
It is all very well for the Government to say at this stage that they have no intention of doing that, and that they will not want to do it. They may not

want to do it at the moment, because they have enough troubles on their plate, but that is not to say that in a month, or six months, from now, if some of their friends get into difficulties because of maladministration on the part of the Treasury and the Government in failing to have a proper prices and incomes policy, and are on the verge of bankruptcy, they will not be prepared to act under these provisions if they are asked to take over—I shall not say Guest, Keen & Nettlefold, but, say, the ABC company.
I think that the Clause as it stands is much too wide. I cannot see why the Government need to have the Clause in these terms. There are no restrictions at all in it. The Government could take over virtually anything. I am all in favour of the nationalisation and socialisation of all industries. If the Government say that they will use these provisions to socialise the whole of our industry, then, provided that the terms of compensation are not too generous, and provided that they assure me that the unlimited amount of money allowed by the Clause will not be squandered, I might support the Clause, because it might provide an easy way of carrying out the Labour Party's programme to socialise all industry.
If that was the reason why the Government wanted the Clause—and, who knows, they may not be in office for all that long—it may be that the next Labour Government could say, "We do not have to introduce any new Bills for nationalisation or socialisation because there is a model Act—the Rolls-Royce (Purchase) Act—on the books, and we can acquire any business or undertaking that we like". If that is the intention, I shall be pleased to see Clause 1 stand part of the Bill.

Dr. Gilbert: I am glad that the Minister is in the Chamber, because I should like to echo the compliment paid to him some time ago by my hon. Friend the Member for West Lothian (Mr. Dalyell). I think that the right hon. Gentleman has genuinely been trying to give us some answers to some of our questions.
The only reason that I rise again is that the Minister said that he did not want to answer many of the questions that I put to him earlier. I appreciate that,


and I have no wish to add to his difficulties, but I hope that he will undertake to write to me and give me the answers to those questions which he did not touch on in the debate.
I should like to come back to this question of the evaluation of the price, and the position of the sub-contractors. The Minister has heard from a number of hon. Members how urgent is the problem of the sub-contractors. One hon. Gentleman opposite said that the whole matter was one of confidence, and confidence is what is so badly lacking among sub-contractors.
We accept that a quick valuation of Rolls-Royce is not possible. But it has been established by the Government that the price to be paid will not be concerned just with the valuation which is arrived at. The Minister said that the Government are prepared to bid if necessary to keep out foreign control. Clearly, then, if other considerations enter, the Government are involved in a political rather than just a commercial decision. Can the Government take such a decision as to the proportion that they want the unsecured creditors to receive for the debts owing to them from Rolls-Royce? Having taken it, can they announce it?
The Minister says, fairly and properly, that he does not know what the total costs will run out at. No one is asking him to estimate the total cost, including the penalty clauses, down to the last million pounds or so, but surely he can make an estimate with a margin or error of £20 million to £40 million. That is not much to ask. After making that sort of estimate, surely he can compare it with what the Government, in the last resort, are prepared to pay. Then at least the sub-contractors can have some idea of what they can expect to rescue from this sorry mess.
If the Minister cannot make an announcement of that sort, does he realise that it may take many months for these firms to know where they stand? That will be just too late. It is absolutely out of the question. Many of them will go under, as I am sure the right hon. Gentleman realises. I hope that he accepts that I am not trying to make a party point. I am trying to help him and us out of our difficulties.
Surely the Government are seized of the effect that the failure of these firms will have on Rolls-Royce itself. I have sat right through this debate, as I sat through Mondays debate. My hearing may have failed me, but I have yet to hear a single mention from the Government Front Bench that they are seized of this crucial matter—that the survival of Rolls-Royce depends on the survival of its sub-contractors. It is as simple as that.
I simply cannot believe that the Government's last word is that the sub-contractors will just have to take pot luck, but that is all the news we have had so far. I simply cannot believe that it is the Government's last word that no estimate can be made of how many shillings in the pound, give or take a little, the sub-contractors can expect to receive.
Worst of all, I simply cannot believe that the Government's last word is that it is impossible for them now to give the sub-contractors any idea of when they will know their fate. If that is their last word, a hopeless shrugging of the shoulders, a Gallic gesture, saying, "There is nothing we can do about it," they clearly have yet to get any idea of the size and complexity of the problem with which they are faced and which they so glibly imagined they had solved with an act of chauvinistic bravado a few very long days ago.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Mr. Dalyell: Are we to have no Ministerial reply?

Bill reported, without Amendment.

Motion made, and Question proposed,

That the Bill be now read the Third time.

3.45 a.m.

Mr. Dalyell: I think that most of us would agree that many of the points which were made were of a serious and urgent nature. I do not want to make a long speech again. I invite the Parliamentary Secretary, who was making notes, not to make a long speech. We do not want to trick him into anything, but we


think that some real issues have been raised in relation to sub-contractors whom we are meeting later today, and perhaps he would care to comment.

Mr. David Price: The whole House shares the obvious concern the hon. Member for West Lothian (Mr. Dalyell) has for the 18 per cent. unemployed in Livingston. As the hon. Gentleman knows, I have been to Livingston in a former capacity. I hope that the hon. Gentleman and the whole House will realise that the Government are aware of the real human problems that are involved in this. The hon. Gentleman knows me well enough to realise that I am deeply aware of the problems.
I want to deal with some of the points the hon. Gentleman raised; because, though some of my colleagues may have thought that the hon. Gentleman spoke for rather a long time, I know the sincerity with which the hon. Gentleman made his points.
The hon. Gentleman asked, first, whether the present Government had treated the Americans with the same candour as he felt and as the right hon. Member for Bristol, South-East (Mr. Benn), the reason for whose absence at this time we appreciate, felt applied under the previous Administration.
I can say—I think that this has been in the Press—that we did at the earliest suitable moment contact the American Administration. This is the proper relationship. It was for Rolls-Royce to deal direct with Lockheed. We more than once suggested to Rolls-Royce that they should have early discussions with Lockheed. They knew that Mr. Haughton was coming over. This visit was already arranged before Rolls-Royce were aware how serious their financial position was. Rolls-Royce felt—it was their decision and not ours—that it was better to stick to the timetable, and I believe that they made some effort to see whether Mr. Haughton could come earlier or whether they would be able to see him earlier. However, this was their decision and they decided to adhere to the original timetable. I assure the hon. Gentleman that ahead of that the Government got in touch with the American Administration.
The hon. Gentleman and one of his colleagues said that on these big engine

contracts the normal form has been that the profit is made in the later part of the programme—in terms of engines when it comes to the later sales of the aircraft into which the engines are to go. Equally, it will be agreed that it is a difficult and important calculation to work out the programme and the build up. It is a curve which in terms of return rises at the end. It is important above all to discount it. This is one of the occasions where much of the technique of D.C.F. is vitally important.
The hon. Gentleman and the hon. Member for Dudley (Dr. Gilbert), who knows about this matter, will appreciate that if the timing is got badly out of phase in terms of delivery build-up and also if the production costs on the early engines are going wrong—if one is making a thundering loss and is in danger of delay penalties—this puts the whole thing out. That does not vitiate what the hon. Gentleman said as being broadly true, but the programme went wrong on this occasion.
My right hon. Friend has made the point—and I would have made it if I had had enough time in my winding up speech—that what is clear about the contract is that Rolls-Royce underestimated the time it took to go through development, through prototype and into production. The production people naturally need a long time to fulfil their programme, and in order to meet a very tight production programme things were passing from prototype design into production well ahead of them being finalised in the development stage. The result was that engines would be going to the customer. Lockheed in this case, which were not up to design specification. All right, they worked, but below design specification. They would have had to be returned to be re-vamped. Alternatively, the engines had a much smaller service life, because one of the problems is reliability. They could have been running for a short time, but if it was a short service life the contract would not be fulfilled.
This was the point in the spectrum, from the original idea to ordinary production, at which the troubles arose. It was because of this that it had got completely out of hand. It is fair to say that until very recently Rolls-Royce were


not aware of the scale of this "out-of-phase" in time, and they went on for too long before realising this, and it all happened terribly suddenly. When they really appraised it they discovered that they simply had not the resources to carry on.
Hon. Members opposite spoke about Section 332 as being a grotesque excuse. Like the hon. Member for West Lothian, I am no lawyer, but he and I have been in the House long enough to have a respect for these matters. I can assure him that Rolls-Royce took their own independent legal advice, and it was clear to my right hon. Friend and I that they were very concerned about this matter from the moment they told us how bad the situation was. They were getting their own advice the whole time to see how good or bad the situation was. But Section 332 absolutely personalises this responsibility. Whereas a public company is a limited liability company, under Section 332 the directors are personally and severally responsible to the limit of whatever resources they have and can be at risk on a criminal charge.
On the other hand, from the Government point of view, if we had employed some of the devices suggested in the debate, the Government would have been at risk under Section 332 to the extent that they would have become liable for the whole of the liabilities of Rolls-Royce. I cannot argue about whether this is correct legal advice, but this was the advice we had.
The hon. Gentleman spoke of the dangers of aero-engine contracts. He exaggerates. Although we have all made clear that the RB211 concept is extremely interesting technically and is forward-looking, we must remember that there are other aero-engines which may not be technically quite as exciting but are also very important.
No one has yet raised the wider question of whether there is room in the free world, which is the relevant market, for three companies to be manufacturing large aero engines. When I say that, I am not talking about the sort of engine that we have in the military aircraft programmes. I am not even talking about where I think the next obvious line for the future lies, which is in the really quiet engine of, say, 25,000 lbs. thrust, or what we are thinking about in terms

of the possible civil applications of something very near to VTOL—it may be a little STOL, but certainly a very short take-off. I do not think that the RB211 technology is essential for that.
Furthermore, the House will recognise that, were the worst to happen and it was not possible to renegotiate a satisfactory contract with Lockheeds about continuing the RB211-22, the RB211 technology is mainly known, and we should have the benefits of it. Certainly it should be one of our basic purposes to ensure that the technology is preserved and developed, even if not in the RB2I1-22. I will not develop that thought further. There are quite a number of permutations on it. But we shall not have lost our technology.
The hon. Gentleman mentioned the problems of Short Brothers and Harland, and we all know the importance of the podding contract for the RB211-22 in that connection. Clearly, the company is one of the many contractors to Rolls which are particularly dependent on their contracts. But, equally, a lot of other contractors have a wide range of contracts with Rolls, though possibly not those in the hon. Gentleman's constituency.
It is not for me to supplement what my hon. and learned Friend the Solicitor-General said earlier, but it is clear that for those who are suppliers across the board, the large part of Rolls which will form the basis of the new company will provide continuity of contracts. Legally, of course, the contracts will have to be renegotiated, because a new entity will be involved. But I have no doubt that they will be renewed, since the projects will remain the same.
I might be able to give some comfort to the hon. Gentleman in this connection. Assuming that nothing else happens, these firms would be in a position to renegotiate possibly a higher price with the new company—they could argue that they have outstanding debts owed them by the old Rolls company. Matters will be helped even more if we are able to renegotiate the RB211 contract. I do not want to exaggerate the position, but they will still have claims on what remains of the old company.
Then the hon. Member for Dudley will recall the announcement made by the Governor of the Bank of England,


who has said that banks have been instructed to help with credit, on normal banking terms, those firms finding themselves in difficulty. The firms which the hon. Member for West Lothian has in mind will be in a fairly strong position vis-à-vis their bankers, because they will have contracts from the new Rolls, although large debts will be owed them by the old company. That, in my judgment, should enable them to get accommodation from their banks in circumstances in which they might have found difficulty without that instruction from the Governor. I do not for a moment pretend that this answers the whole of the hon. Member's concern, but I suggest that it is some comfort. He said that he is to meet some of the people concerned in his constituency tomorrow. I think that that will help.

Mr. Dalyell: Very useful and helpful, yes.

4.0 a.m.

Mr. Eddie Griffiths: One firm in Sheffield has £1¼ million owed to it by Rolls-Royce, about £350,000 of which is tied up with the RB211. Assuming that such debts are outstanding and little will be honoured in full, does the hon. Gentleman think that there will be a danger that some of the firms dealing with Rolls-Royce in a big way will on new contracts raise their prices by, say, 5 per cent. over a period of 5 to 10 years in order to recover some of these debts? Even a large firm cannot afford to write off debts of £1 million.

Mr. Price: I think that the answer there is that it will simply be a matter of negotiation, to put it at its crudest, between the new Rolls-Royce and such suppliers as he mentions. It would be a matter of straight bargaining. It will depend on how far each is dependent on the other. I can only speak from what one knows of this sort of thing, where it has happened at a lower level of far less national importance. That has been done.
I do not exaggerate the extent of the help, but I say that, marginally, there will be a little comfort in the fact that the new Rolls-Royce will be in business and will be wanting to continue all the projects. Leaving aside the RB211 for the moment, it will wish to continue

everything else. Therefore, the new Rolls-Royce will continue to need the work of its contractors. I do not pretend that that goes a long way towards——

Mr. Dalyell: This is a most useful and helpful statement, and we are deeply grateful. But this is the first time in 12 hours that we have had the Governor of the Bank of England introduced into the matter, and many of us would be very much easier in our minds if we thought that there was some directive from the Governor of the Bank to the joint stock and other banks, particularly the merchant banks, to help in the next few weeks, at least until such time as a decision is made on renegotiation.

Mr. Price: The hon. Gentleman probably knows what came out on the tape almost immediately after my right hon. Friend made his original statement. I have not with me a copy of what the Governor said, but I shall be happy to send it to the hon. Gentleman. It was to the effect that the ordinary banks with which a firm deals—not the Bank of England—would be able to accommodate these companies in difficulties, within normal banking criteria.

Dr. Gilbert: I am most grateful for the hon. Gentleman's remarks, which are quite the most helpful we have had in the debate on this difficult problem. Would he try to ensure that the suggestions he has been making receive the widest possible publicity?

Mr. Price: They are not my suggestions. I am merely commenting on the statement which was put out by the Bank of England. It is, therefore, a question of firms in the hon. Gentleman's constituency talking to their bank managers. I suggest that they have a copy of the Bank's statement. But he makes perfectly clear that it must be up to the banks, using their ordinary commercial judgment. I see that my hon. Friend the Financial Secretary to the Treasury nods, agreeing that I have interpreted that correctly.
The hon. Member for West Lothian talked about criticism of Rolls-Royce management at the middle level. I was not aware, having listened to nearly all the debates in the House and having read much of the Press commentary, that


there had been any criticism of the middle management of Rolls-Royce. I thought that the criticism was at a much higher level than that. It would be wrong for me to comment. As the House knows, the Board of Rolls-Royce is seeking an extraordinary general meeting of shareholders with the intention to pass a resolution asking, under Section 165 of the Companies Act, I think, for there to be an inquiry as laid down in the law. I think that, in view of the likelihood of any inquiry, it would be quite improper for me to give my own personal judgment of who may or may not in Rolls senior management, or anywhere else, be held to be in any way culpable for bringing about the situation. I think that must be right, because, having privilege at this Box, or the privilege which any hon. Member in the House has here, it would be quite wrong to point even the smallest finger at anybody. I am sure the House will agree with me on that.

Mr. Eddie Griffiths: With reference to middle management, I think the reference was made by the right hon. Gentleman who was replying to one of his hon. Friends who was dealing with management. I know that the right hon. Gentleman was using a very quiet voice at the time, but I thought I caught him saying, "In reference to middle management, I am of the opinion that there are too many."

Mr. Corfield: "A certain amount of over-staffing" was the term I used.

Mr. Price: That is slightly different from saying that middle management was grossly misinformed over this.
Similarly, I would not be prepared to answer the hon. Gentleman's many questions about the role of the banks or of particular banks in this unfortunate situation in which Rolls finds itself, because, again, all this will be relevant to the inquiry under Section 165, or any other inquiry which takes place, and, quite clearly, what has happened in the general conduct of affairs is going to be inquired into, and I think it would be quite wrong of me to comment at all.

Mr. Dalyell: What will be the nature of the inquiry? The hon. Gentleman is in a position to say that.

Mr. Price: There will be, as I understand it, a Department of Trade and Industry inquiry.
May I just return to what I was saying about the statement of the Bank of England? Because my right hon. Friend has given me a copy of the text. It was quite simply that:
Steps will be taken to ensure that bankers will not be prevented by current credit restrictions from accommodating, subject to normal banking criteria, those companies who are either trade creditors, suppliers or sub-contractors of Rolls-Royce and who may need temporary additional finance as a result of these developments.
I hope that hon. Members may find that of some modest assistance to their constituents.
Finally, I would make mention of the hon. Member's comment about the European industry. What my right hon. Friend said was merely that one of the many options for the future structure of Rolls was some arrangement with the leading aero-engine manufacturers in Europe. The hon. Member will be aware that last autumn there was a tentative approach from the French and Germans—it is true it was in relation to consideration of whether we should rejoin the A300B—about the need to look together at the possibility of working together in the aero-engine field further as a collaborative venture.
It would be quite wrong at this hour to speculate on all the hon. Gentleman had to say. All I shall do now is to mark this out as one option for the future of Rolls. This has relation to what I was saying earlier about raising the question whether there is room in the free world for three major aero-engine manufacturers in the big league.
I hope that what I have said may be of some assistance to the House. I believe, as I said earlier, that this is a right Bill. I appreciate, as do all my right hon. Friends, that it is remarkably general, and that we are asking for considerable powers, but I think the House will agree that in this situation the Government had no choice but to act quickly and decisively and firmly. On some of the more detailed points—I say in response to the hon. Member for West Ham, North (Mr. Arthur Lewis)—one would have liked to have had more to present to the House, but there has


simply not been time. It has been more important to act quickly and show the Government's determination, because if we had not done so, then with the repercussions throughout the economy of lack of confidence, and of uncertainty about the Government's intentions, the situation would have been even more serious than the one we are facing today.

Mr. Bishop: Before the Parliamentary Secretary resumes his seat, will he bear in mind the very great importance of the need for confidence being based on communications, and keep the House informed at all times of the progress made, because I am sure that many thousands of sub-contractors and others throughout the country will be anxiously awaiting the results of the investigations, and some assurances about their future.

Mr. Price: I would entirely accept that.

Mr. Dalyell: I take the opportunity of thanking the Ministers, who have been kept up much later than Ministers should be kept up, for answering my questions. I wish them luck in the renegotiation of the contract.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

SEA FISHERIES

Resolved,
That the Salmon and Migratory Trout (Prohibition of Fishing) Order 1971, a copy of which was laid before this House on 28th January, be approved.—[Mr. Buchanan-Smith.]

MINES MANAGEMENT BILL [Lords]

Order for Second Reading read.

Motion made, and Question put forthwith, pursuant to Standing Order No. 60A (Second Reading Committees), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — VEHICLE (EXCISE) BILL [Lords]

HYDROCARBON OIL (CUSTOMS AND EXCISE) BILL [Lords]

Orders for Second Reading read.

Bills to be read a Second time this day.

Orders of the Day — A5 ROAD (GAILEY ROUNDABOUT —SHROPSHIRE BORDER)

Motion made, and Question proposed, That this House do now adjourn."—[Mr. More.]

4.14 a.m.

Mr. Patrick Cormack (Cannock): I am most grateful for this opportunity of raising a matter of great concern to my constituents. The A5 runs right through the Cannock Division, and it would be true to say that along this entire length it is in need of improvement. However, I want to concentrate my remarks on that stretch between the Gailey roundabout and the Shropshire border; not only because this is the longest and probably the most dangerous stretch, but also because it is, for other reasons, very much in the news at the moment.
The stretch of road in question is some nine miles in length from the intersection of the A5 and the M6 to the border with Shropshire just beyond the village of Weston-under-Lizzard. For the whole of this length the road is narrow and it is regularly congested. It is used by a great volume of heavy traffic and, as one of the main highways to Wales, is also used every year by tens of thousands of holiday makers. It presents problems dangers and frustrations to both residents and drivers. As my hon. Friend the Under-Secretary of State for the Environment said in a letter to me on 23rd September last:
…there is no doubt that the existing length of A5 … is inadequate for the traffic now using it.
There are various particularly hazardous spots, of which possibly the worst is the village of Weston-under-Lizzard; a village whose peace is continually shattered, and whose residents walk in fear as traffic thunders along the narrow road and frequently runs on to the pavements on either side. This village needs a bypass, and although the need


has been talked of for over forty years virtually nothing has been done to ease things, until the recent erection of some totally insignificant and absolutely ineffective "No Overtaking" signs.
Here we have, therefore, a stretch of busy road manifestly in need of improving. Never has there been a better opportunity to effect the necessary improvements, for the Secretary of State is about to decide on the route of the proposed link between Telford new town and the M6.
I want to make most of my remarks in this context, and to concentrate on deploying the argument that a widened and improved A5 would adequately serve Telford's needs in this respect. I contend that to build a six-lane motorway between the new town and the M6 is unnecessary and undesirable, and that the A5, which runs from the M6 to the heart of Telford, is fully capable of improvement to a good dual carriageway standard.
Feeling within my constituency is overwhelmingly in favour of this solution, and I know that the same sentiments are shared by those in adjoining constituencies. That is why I am glad to see my hon. Friend the Member for The Wrekin (Dr. Trafford) and my hon. Friend the Member for Brierley Hill (Mr. Montgomery) here. I hope that they will have the good fortune to catch your eye, Mr. Speaker.
The area with which we are concerned can be roughly defined on the map as a triangle, formed by the A5 in the north, the A449 in the east and the A41 and A464 in the south-west. The country within the triangle is good farmland, and there also is a considerable acreage of attractive woodland. Within the area there are several places of great interest, including, in my constituency, the beautiful village of Brewood, with its fine church, Weston Park and Chilling-ton, with its great house and lovely park—the home of the Giffard family for the last 800 years.
Just beyond the boundaries of my constituency we have the exquisite church of Tong and the country around Boscobel, famous for its associations with Charles II. This triangle is of great importance to the area as a whole, not only for its intrinsic merit but also because it pre-

vents the sprawl of urban development from Wolverhampton and the Black Country. It has been designated as green belt and it has, for some time, been impossible to obtain planning permission save for agricultural buildings or for infilling within the villages. This is the area that is under threat.
Three possible motorway routes have been investigated; one going through the centre of the area near Brewood, another passing inside the southern boundary of the triangle encroaching on valuable gravel deposits at Hilton and threatening some fine farms, and the third going north of the A.5 but causing equal damage from the amenity and agricultural point of view, creating enormous problems of severance and sterilisation.
Not only would the countryside be irreparably damaged by the building of a motorway; not only would many acres of valuable agricultural land be lost for ever, but a decision to go ahead would make nonsense of the Department's declared policy on green belts—a policy of which the implications do not seem to have been clearly thought out.
On 15th January my hon. Friend the Minister for Local Government and Development told me that he was satisfied that there was adequate examination of the possibilities of improving existing roads in green belt areas. He went on to say that where traffic volumes are high and the widening of the existing road would involve destruction of a large number of properties an entirely new road may be preferable on both economic and environmental grounds. He also told me on 28th January, in reply to a further question, that the Department has no plans to revise the green belt policy. If these answers really mean what they say there is an excellent case for the widening and improving of the A.5. It would not involve the destruction of large numbers of properties; it would not encroach upon the green belt.
But there are many other things that the Department has not fully considered. I am told that a motorway takes up 22½ acres of land per mile, at a cost of up to £1,600,000, but apparently the cost of putting 225 acres of agricultural land out of use for ever has never been seriously calculated; and when we express concern


about some of the areas of beauty and fine buildings that might be threatened we are told that it is impossible to say how many listed buildings have been destroyed, or how many landscaped parks have been encroached upon, during motorway construction since 1960.
It appears that the road construction unit has been prejudiced against the A.5 from the start. It was only after great public pressure that it considered investigating it, and there is a strong local suspicion that there was more anxiety to emphasise the difficulties rather than discover the merits.
It is said that a motorway is essential, and that the A.5 cannot be converted into one. It is said that the alignment of the A.5 is sub-standard for a major road; that the present frontages would have to have access on to the road; that junctions with other roads would have to take the form of ground level roundabouts. But none of these objections really hold water.
The case for a six-lane motorway is certainly not substantiated by the Department's investigations. I am told, for instance, that during August last year a 24-hour count showed that 10,780 vehicles used the stretch in question on an average week day. This was enough to make the A5 pretty unbearable, but it is considerably below the figure of 26,000 vehicles which I am told used the M6 at a similar time. And the Department does not even know where all these A5 vehicles were going. It asserts that 80 per cent. were bound for Telford and points west—not a very staggering revelation! But apparently it was impossible to tell how many had Telford as their destination and how many were bound for Wales, or even how much was holiday traffic—in August!
These figures hardly indicate that there has been the sort of detailed investigation necessary to establish the need for a six-lane motorway, and I presume we are talking of a six-lane rather than a four-lane motorway because if we are not there really seems little point in having the argument when by common consent the A5 is capable of being dualled.
I wish to deal with the other objections briefly. Nowhere in this stretch is the existing gradient too steep, and although

there would indeed be problems, particularly where the road passes under the Shropshire Union Canal, none of these is incapable of solution, and indeed in 1966 I understand a scheme for dualling the AS was prepared at the request of the then Ministry of Transport.
With a little ingenuity the access for almost all frontages could be reversed and there are very few buildings along the side of the A5 between Gailey and Weston. With a little ingenuity, too, many of the existing road junctions could be closed and there need be no more than three roundabouts with perhaps an underpass at Ivestsey Bank—and I know from an Answer which I was given on 4th February that the construction of underpasses and bridges is calmly contemplated. It might, too, be worthwhile mentioning that the local land owners concerned have made it perfectly plain that they will do all they can to help if the A5 route is chosen.
It would be easy to speak for a very long time on this issue, for it is of enormous importance to my constituents. I hope that what I have said will have helped to reinforce the case which local opinion generally believes to be unanswerable—that as a matter of priority and common sense the A5 should be widened and improved to dual carriageway standard and that, if it is, Telford will be provided with an adequate link with the M6.
And, of course, although this is a local issue, there are wider implications. If we really mean what we say when we talk about the importance of conservation and of maintaining a decent environment, of preserving the balance between transport needs and amenity values, it is surely a nonsense anywhere at any time to take a decision which would cause unnecessary destruction of beauty and loss of agricultural land when there is an alternative solution which would cause neither, and solve many existing problems into the bargain.

4.23 a.m.

Mr. Fergus Montgomery (Brierley Hill): I am grateful for this opportunity to intervene briefly in this debate. I should like to underline the points which my hon. Friend the Member for Cannock (Mr. Cormack) made and to endorse the need for improving the A5. We all agree


that this is a very bad stretch of road and that if it were improved and made a dual carriageway it would provide an adequate link between Telford and the M6. I stress that there is grave disquiet in South Staffordshire at the prospect of having a six-lane motorway running through the countryside because it would be a threat to people's homes and to good farmland. We feel that the need for a motorway has not yet been proved.
I have always found my hon. Friend the Under-Secretary of State extremely helpful and diligent with any problem that I have put to him since he became a Minister. I hope that he will earn the undying gratitude of people in South Staffordshire by giving an assurance that there will be no motorway in this part of the country but that instead the A5 will be improved, which would save a great deal of public money and would involve much less inconvenience for the people who live in the area.

4.25 a.m.

Dr. Anthony Trafford (The Wrekin): I, too, am very grateful for the opportunity to express the concern of my constituents about the problem of communications between Telford and the M6. It is a question either of widening the A5 or considering the prospect of a motorway.
There are two significant points that I hope my hon. Friend the Under-Secretary will answer. First, I hope that he will expand on the need for the motorway at all. On the evidence that has been made public and presented to us, there seems to be no conclusive case that it is necessary, and there is nothing to suggest that dualling the A5 would not meet the case adequately.
Second, if my hon. Friend chose in favour of a motorway he would also cause serious damage to the village of Shifnal, especially in view of the proposed movement of the intersection in the area known as Knowle Bank. This would have the effect of boxing in the village and narrowing the very valuable area of green belt lying between the village and the eastern boundary of Telford new town.
Many of my constituents are very concerned about this question, and have expressed the same views as have already been expressed by my hon. Friends the

Members for Cannock (Mr. Cormack) and Brierley Hill (Mr. Montgomery). They all recognise the need for good road communications, but they are concerned about the form that these may take.

4.27 a.m.

The Under-Secretary of State for the Environment (Mr. Michael Heseltine): I am immensely impressed by the diligence and care with which my hon. Friend the Member for Cannock (Mr. Cormack) has presented his case on the numerous occasions on which he has made representations to me in one form or another. My hon. Friend's work on behalf of his constituents, and that of my hon. Friends the Members for The Wrekin (Dr. Trafford) and Brierley Hill (Mr. Montgomery), is a remarkable tribute to the diligence with which they have approached the matter. I have found their interest of great help to me in familiarising myself with many of the issues that I shall have to consider in making recommendations to my right hon. Friends the Minister for Local Government and Development and the Secretary of State. I know that my hon. Friends appreciate the difficulty I find myself in in coming here at all this evening, because of the need to take a balanced view of the whole matter before any decisions are published.
My hon. Friend the Member for Cannock asked that I should carefully consider first the particular problems on the A5 in the section from the Gailey roundabout to the Shropshire border, and give him a definite assurance that it would certainly be our aim to maintain and improve this road to cope with the traffic that it is to carry. Before we can make decisions about the sort of traffic that we think it will carry we must make a decision on the wider issue, which is the route of the M54 link from the M6 to Telford new town. The western end of this route has been fixed, with the five-mile stretch of the Wellington by-pass. That leaves us with the options that are available to extend the M54 across country eastwards. I accept at once the definition of my hon. Friend the Member for Cannock when he described the triangle.
I believe that there are four options for consideration before the Secretary of State publishes a line for the route. First, there is the one mentioned by my hon.


Friends, which is to improve the existing route of the A5. The second possibility is to provide a new route running approximately along the route of the A5. The third alternative is that there should be a new route roughly through the centre of the triangle. The fourth route is known locally as the southern route. These are the four possibilities which I understand to exist. I am expecting shortly to receive a submission from the Midland Road Construction Unit, when it will put its suggestions as to which it thinks is the route which the Secretary of State should publish, taking all factors into consideration.
I am sure that it is not necessary to reassure my hon. Friends, but I have no hesitation in doing so, that the submission is one which the Secretary of State himself has to consider. It is up to him to make up his mind, bearing in mind all the evidence, which route he will publish. I have paid sincere tribute to the work of my hon. Friends in this matter but I question equally sincerely the assumptions that the homework is not done or that certain factors are not taken into account or that there is a prejudice on the part of those whose job it is to undertake this work. I know from my experience that that is not so.
The people involved have a very difficult job. They know from the start that it will never be possible to find a solution that satisfies everyone. Indeed, the only certainty in the sort of work which such a project demands on a considerable scale is that it will be surrounded by controversy. But it is my experience of the last few months that there is absolute attention to detail and determination to take into account all the factors by those who plan and propose the new routes. It is very impressive to see this in action.
I do not pretend that the solution published will be widely acceptable. I do not believe that one is fortunate enough to find such routes. One has to find routes which are acceptable, taking into account all the factors, to as many people as one can hope to satisfy. But I am convinced that a great deal of care and attention, particularly in the case of amenity and environmental factors, is applied to the job and to the immense amount of detailed work which follows the investigation to produce the facts and

figures on which recommendations are made.
When the Secretary of State has made up his mind which route he should publish, that is not the end of the matter. It is not as though some arbitrary decision is taken which never has to be tested. Whatever route is published, there is a statutory procedure providing for a public inquiry. At that inquiry all the evidence that the Department has produced is open to public debate and may be subjected to the most detailed scrutiny. I have no doubt that if this particular choice were to lead to a public inquiry my hon. Friends would want to take some part in ensuring that any of the assumptions made stood up to detailed investigation.
One of the important points my hon. Friends the Members for Brierley Hill and the Wrekin made was that they were questioning the need for a new motorway along the route of the M54 at all, and that is a legitimate question. It is one which my right hon. Friend will ask. In advising him in the first place, I shall ask it in order to establish the facts and figures. Unless we were satisfied that there is a case we would not publish a route at all.
If there is publication of a route, it will be done because those responsible for investigating it and because the Ministers responsible in the last resort are all convinced by the arguments that will be received and for no other reason. We appreciate my hon. Friend's concern and that it will be necessary for us to justify the over all need for the expenditure of the substantial sums involved on a route of this sort. I hope my hon. Friends accept my assurance that we share their anxiety and that it is no part of our objective to publish routes which do not stand up to the detailed scrutiny which all of them get and which this one will also get.
Although I cannot in any way comment on the observations of my hon. Friends, because to do so would be to get involved in public discussion of matters which at this stage are essentially for consideration by the Department, I assure them that we shall shortly have a submission which will enable Ministers to take the decisions which have to be made, and we shall want to take them with expedition.


I cannot add to what I have said tonight and in correspondence with my hon. Friends. All the factors which they have brought to our attention will be carefully borne in mind. We appreciate that we have to deal with any objections which they raise or satisfy them, and that will be our intention. However, I ask them to forgive me if on this

occasion I do no more than assure them that we shall do everything in our power to balance economic necessities with the important environmental considerations which they have mentioned.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes to Five o'clock a.m.